INTRODUCTION

Compensation Management is an integral part of the management of the

organization. Compensation is a systematic approach to providing monetary value to
employees in exchange for work performed. Compensation may achieve several
purposes assisting in recruitment, job performance, and job satisfaction. To be
effective, the managers must appreciate the value of competitive pay, their human
resources, and have an investment view of payroll costs. It is of prime importance
for an organization to maintain pay levels that attract and retain quality employees
while recognizing the need to manage payroll costs.

The literal meaning of compensation is to counter-balance. In the case of

human resource management, compensation is referred to as money and other

Benefits received by an employee for providing services to his employer. Money

and benefits received may be in different forms-base compensation in money and
various benefits, which may be associated with employee's service to the employer
like provident fund, gratuity, insurance scheme, and any other payment which the
employee receives or benefits he enjoys in lieu of such payment.
"Compensation includes direct cash payments, indirect payments in the form of
employee benefits and incentives to motivate employees to strive for higher levels of
productivity”.

Compensation is a tool used by management for a variety of purposes to

further the existence and growth of the company.

Definition:

The Compensation is the remuneration given to the employees for the work they do
for the organization. In other words, an employee is entitled to both the financial and
the nonfinancial benefits in return for his contribution to the organization.

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THE PURPOSE OF COMPENSATION IN AN ORGANIZATION:

 Attract & retain employees

 Motivate workforce & sustain high morale
 Meet legal requirements
 Motivate personal growth

In every organization it is essential to understand the importance of

compensation and the flexibility the hiring managers can have in designing a
compensation package that can in turn attract, retain and develop a quality talent pool.

Objectives of Compensation management are:

1. Attracting and Retaining Personnel:

From organization’s point of view, the compensation management aims at attracting
and retaining right personnel in the Organization Not only they require persons who
are well qualified but they are also retained in the organization. There is no birth of
personnel at operative levels but the problems come at the managerial and technical
levels. Particularly for a growing companies. Not only have they required persons
who are well qualified but they are also retained in the organization. In the present
day context, managerial turnover is a big problem particularly in high knowledgebase
Organizations.
2. Motivating Personnel: Compensation management aims at motivating personnel
for higher productivity. Monetary compensation has its own limitations in motivating
people for superior performance.

3. Optimizing Cost of Compensation: Compensation management aims at

optimizing cost of compensation by establishing some kind of linkage with
performance and compensation.

4. Consistency in Compensation: Compensation management tries to achieve

consistency-both internal and external-in compensating employees. Internal
consistency involves payment on the basis of criticality of jobs and employees'
performance on jobs.

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Pictorial representation of Components of Compensation system is as follows:

MOTIVATION

COMPENSATION
PACKAGE

EMPLOYEE NEED
RETENTION SATISFACTION

Components of compensation System

Compensation systems are designed keeping in minds the strategic goals

and business objectives. Compensation system is designed on the basis of certain
factors after analyzing the job work and responsibilities. Components of a
compensation system are as follows:

JOB
ANALYSIS

SALARY PAY
SURVEY STRUCTURES

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Importance of Compensation Management

Compensation plays a critical role in aligning employee behavior with

business objectives. Since the industrial age, the four Ms of business management i.e.
Man, Material, Machine and Money are said to contribute to the business’s success.
Among these, man has been considered to be the most important factor contributing to
organizational effectiveness and efficiency.

Attributes such as lateness, absenteeism, unsafe actions, alcoholism, drug

abuse, poor training, and incompetence can upset the apple cart of business
objectives. Efficient employment practices are inevitable towards the sustenance of
goals by making sure that this one important factor is set right on the path of
productivity. There is no doubt that by employing the right kind of man for the right
job can discard the wide space called ineffective business management. However,
human elements such as expectations, emotions, ambitions, egos etc. too contribute a
fair amount to business success. Thus, a fair compensation system is created in every
organization on order to make the most of most important ‘M’ element.

Compensation attributes to all forms of pay and rewards received by

employees for their performance, including all forms of benefits, perks, services and
cash rewards. It is paramount to acknowledge and announce the total compensation to
your employees. This needs to be done so that the significance of what you are putting
forth in compensation is clear and hence attracts and retains talent.

A variety of elements need to be considered when designing a compensation

plan that is also compatible to the employee demographic and budgetary bridles. The
following should be included when designing a compensation plan:

 Various elements that will embody the total compensation offered to the
employees.
 Comparable and competitive compensation rates within the industry.
 Compensation needs to be unbiased. There must always be a logical increase
in pay when it comes to length of service, job title, skills and abilities required
to accomplish the job in a productive manner.
 An already established criterion that results in a pay increase.
 A well designed system to measure and control payroll costs.
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  A proper procedure to measure the success of the organization’s compensation
program by determining if the compensation results into favorable retention
numbers, workforce performance and motivation.

THEORIES OF COMPENSATION

1. Reinforcement and Expectancy Theory: This theory is based on the assumption

that, the reward-earning behavior is likely to be repeated, i.e. an employee would do
the same thing again for which he was acknowledged once.

Similarly, in the case of Expectancy Theory, given by Vroom, the employee is

motivated to do a particular thing for which he is sure or is expected that performance
will be followed by a definite reward or an outcome.

2. Equity Theory: According to this theory, there should be equity or the uniformity in
the pay structure of an employee’s remuneration. If the employee feels he is not being
paid fairly for the amount of work he does in a day will result in lower productivity,
increased turnover and high absenteeism. The remuneration system should comply
with three types of equity:

2.1 Internal Equity: The employee perceives the fairness in different pay for
different jobs based on the nature of work involved, i.e. he must feel that pay
differentials among the jobs are fair.

2.2 External Equity: The employee should feel the fairness in what they are being
paid is in line with what other players in the same industry are paying to their
employees for the same kind of job.

2.3: Individual Equity: The employee perceives the pay differentials among the
individuals who are performing the same kind of a job and within the same
organization. Usually, an individual with more experience gets high remuneration as
compared to the fresher irrespective of the nature of a job.

3. Agency Theory: This theory states that both the employer and the employee are the
stakeholders of the company, and the remuneration paid to the employee is the agency
cost. The employee will try to get an increased agency cost whereas the employer will

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 try to minimize it. Hence, the remuneration should be decided in such a way that the
interest of both the parties can be aligned.

Thus, these theories posit that the compensation in the form of salary or wages can be
decided on the basis of the outcome or the behavior of an employee.

Factors Affecting Employee Compensation

The Compensation is the monetary and non-monetary rewards given to the

employees in return for their work done for the organization. Basically, the
compensation is in the form of salaries and wages. There are several internal and
external factors affecting employee compensation, which are discussed in detail
below.
Internal factors: The internal factors exist within the organization and influences the
pay structure of the company. These are as follows:

1. Ability to Pay:

The prosperous or big companies can pay higher compensation as compared to

the competing firms whereas the smaller companies can afford to maintain their pay
scale up to the level of competing firm or sometimes even below the industry
standards.

2. Business Strategy:

The organization’s strategy also influences the employee compensation.

In case the company wants the skilled workers, so as to outshine the competitor, will
offer more pay as compared to the others. Whereas, if the company wants to go
smooth and is managing with the available workers, will give relatively less pay or
equivalent to what others are paying.

3. Job Evaluation and Performance Appraisal:

The job evaluation helps to have a satisfactory differential pays for the
different jobs. The performance Appraisal helps an employee to earn extra on the
basis of his performance.

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4. Employee:

The employee or a worker himself influences the compensation in one of the

following ways.
Performance:
The better performance fetches more pay to the employee, and thus with the
increased compensation, they get motivated and perform their job more efficiently.

Experience:
As the employees devote his years in the organization, expects to get an
increased pay for his experience.

Potential:
The potential is worthless if it gets unnoticed. Therefore, companies do pay
extra to the employees having better potential as compared to others.

External Factors: The factors that exist out of the organization but do affect the
employee compensation in one or the other way. These factors are as follows:

1. Labor Market:

The demand for and supply of labor also influences the employee
compensation. The low wage is given, in case, the demand is less than the supply of
labor. On the other hand, high pay is fixed, in case, the demand is more than the
supply of labor.

2. Going Rate:

The compensation is decided on the basis of the rate that is prevailing in the
industry, i.e. the amount the other firms are paying for the same kind of work.

3. Productivity:

The compensation increases with the increase in the production. Thus, to earn
more, the workers need to work on their efficiencies that can be improved by way of
factors which are beyond their control. The introduction of new technology, new mds,
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 better management techniques are some of the factors that may result in the better
employee performance, thereby resulting in the enhanced productivity.

4. Cost of Living:

The cost of living index also influences the employee compensation, in a way,
that with the increase or fall in the general price level and the consumer price index,
the wage or salary is to be varied accordingly.

5. Labor Unions:

The powerful labor unions influence the compensation plan of the company.
The labor unions are generally formed in the case, where the demand is more, and the
labor supply is less or are involved in the dangerous work and, therefore, demands
more money for endangering their lives. The non-unionized companies or factories
enjoy more freedom with respect to the fixation of the compensation plan.

6. Labor laws: There are several laws passed by the Government to safeguard the
workers from the exploitation of employers. The payment of wages Act 1936,
The Minimum wages act 1948, The payment of Bonus Act 1965, Equal Remuneration
Act 1976, Payment of Gratuity Act 1972 are some of the acts passed in the welfare of
the labor, and all the employers must abide by these.

Thus, there are several internal and external factors that decide the amount of
compensation to be given to the workers for the amount of work done by them.

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 DESIGINING OF COMPENSATION SYSTEM

The current competitive conditions in the business world make it difficult

to acquire and retain the top talents. Once the organization is able to identify, it can be
unable to offer the right pay and to manage the pay increases to retain top talents.
The compensation strategy is the extremely important piece of the overall HR
Strategy to keep the company competitive and successful. On the other hand, the
compensation strategy is important to keep the personnel budget under the control and
to manage the jobs in the right salary (pay) brackets. The compensation strategy
differentiates the organization on the job market and builds the attractiveness of the
company for the top talents. They love to be hired by the attractive organization, they
do not like to be hired by the average company offering the same conditions as any
other average organization in the industry.

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Competitive Advantage and Compensation Strategy

Today, the products are similar. It is difficult to distinguish the cars from different car
makers. The employees are in the same situation as the consumers. They have the
problem to distinguish the employers and they are not able to recognize the excellent
organization, when it is not different from the rest. The competitive advantage is the
essential part of the mix for the success. The organization has to present itself
differently, not just by the presentation, but it should differentiate itself by the
different approach toward its employees. The compensation strategy is one of the
most successful differentiators.

The excellent compensation strategy does not just differentiate the organization from
the other organizations on the job market, it brings the differentiation into the
organization as well as the successful employees and top talents feel the success in
their pockets.

The effective compensation strategy makes people feel the success and they speak
about their successes with their friends. It build the extremely excellent competitive
advantage among the competitors as the people feel, the organization really values the
success and it can pay the successful employees.

The effective compensation strategy manages the personnel expenses of the

organization, but it supports the performance management and differentiates the
employees as the successful ones are not motivated to search for a new job
opportunity. The good compensation strategy does not provoke employees to search
the web job boards during the working hours, it makes them to focus on delivering the
results as they can be highlighted and they feel the highlight in their salaries.

The successful compensation strategy gains the competitive advantage and can speed
up the innovation processes and improve the performance management practices in
the organization.

The compensation strategy is not important just for the competitive

advantage, but it supports the other HR Processes and helps them to become highly

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efficient HR Processes and being on the top in the industry (when measured and
benchmarked).

The compensation strategy has a strong influence on the performance of the whole
Human Resources, which is a good vehicle to manage the performance of Human
Resources, but has to be managed carefully as it does not destroy the performance of
the whole organization. Smart compensation strategy supports the HR Processes and
helps to bring the top talents from the job market to the organization and helps to
retain the best talents in the organization as they do not feel the need to find a new job
opportunity elsewhere.

 Recruitment and Compensation Strategy

The effective Recruitment and Staffing cannot exist without the effective
Compensation Strategy. The recruitment can be based on the excellent HR Marketing
Policies, but the HR Recruiters have to be able to offer the competitive salary
packages, which are competitive externally and fully aligned with the policies and the
compensation strategy internally. The recruitment of the best top talents from the job
market cannot be based on exceptions from the compensation policy.

The recruitment and staffing processes have to be supported and backed by the
excellent compensation strategy as the HR Recruiters can offer the competitive
conditions to the right talents from the job market and they are able to identify the key
job positions, where the compensation strategy allows to be more aggressive against
the pay market.

The job candidates are extremely sensitive to the salary package offered in the Job
Offer letter and the compensation and benefits department should measure the number
of failures in the job offer acceptations. It is the extremely important sign of the
wrongly set compensation strategy, when the job candidates do not accept the job
offers made by the organization.

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  Motivation and Compensation Strategy

The salaries or bonuses are extremely important for the motivation of employees and
managers. Generally, the motivation is not about the compensations, but the
compensation should support the general motivation framework in the organization.

Even the best managers in the world are not able to keep highly motivated teams,
when the compensation strategy is not in line with the job market. The employees
usually know the common levels of salaries in the industry and when the organization
is below the median or the average, it has to compensate the difference in other area.
But, when the difference is too high, the compensation by a different motivation tool
does not work and the employees start to feel demotivated as they receive no equal
value for their effort.

 Talent Development and Compensation Strategy

The compensation strategy provides the key support to the talent management
processes in the organization. The talents have to be clearly supported by the
compensation strategy as the talents usually expect higher salary increases than the
average employees and the compensation strategy has to allow the limited freedom to
managers to do so.

The successful top talents management cannot survive without the adequate support
from the compensation and benefits side. The talents have to feel the different
approach of the organization and the compensation is extremely important in this. The
top talents cannot live on the promises for a long time. They have to see the real
improvements and advances. They deliver, they expect the organization the same.

The compensation specialists have to co-operate closely with the career advisors and
career development specialist to introduce the right mix of the career opportunities
and the compensation strategies for the top talents.

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 NEED FOR THE STUDY

Compensation administration is one of the most important areas of human

resource management because sound compensation policies, programmers’ and their
effective execution are essential to procure, maintain and develop the human resource
of the organization to get effective result from them.

It involves the selection, designing, development and direction of programmes

designed to implement compensation or incentive policy through financial rewards.

In simple words, "compensation administration is a systematic procedure for

establishing a sound compensation structure."

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 SCOPE OF THE STUDY

. The scope of the study is to find out the the compensation management
strategies in BSNL, Rajahmundry division and to evaluate the behaviour and
performance of employee on their work. and focuses on the compensation
management system influences on the employees

The study covers all levels of Employees and various aspects of Employees
like: Identifying Employees attitudes towards various attributes at work place. This
study gives us an insight of how Employees see and perceive about Organization’s

 Interpersonal relations
 Opportunities for career growth
 Compensation and benefits
 Training and development
 Working conditions
 Communications

Compensation management is something that companies must take seriously

if they are to achieve a competitive advantage in the market for talent.
Considering that the current trend in many sectors (particularly the knowledge
intensive sectors like IT and Services) is to treat the employees as “creators and
drivers of value” rather than one more factor of production, companies around the
world are paying close attention to how much they pay, the kind of components that
this pay includes and whether they are offering competitive compensation to attract
the best talent. In concluding this article, it is pertinent to take a look at what Jack
Welch had to say in this regard: As the quote (mentioned at the beginning of this
article) says, if the right compensation along with the right kind of opportunities are
made available to people by the firms in which they work, then work becomes a
pleasure and the manager’s task made simpler leading to all round benefits for the
employee as well as the employer.

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 OBJECTIVES OF THE STUDY

The present study was intended on “A study on Compensation

Management in BSNL” has been undertaken with the following definite objectives.

 To study the nature and importance of compensation management in an

organization.
 To study various factors, determinants and outcomes of compensation
management.
 To find out the the compensation management strategies in BSNL .
 To understand in details how to establish pay rates to different level of
employee.

 To know how the compensation management system influences on the

employees.
 To assess the expectations/ satisfaction levels of employees in an
Organization.
 To identify and analyze the financial satisfaction and dissatisfaction. of the
employees in BSNL.
 To evaluate the behaviour and performance of employee on their work.
 To recommend measures for improving the satisfaction levels employees, so
as to enable them to improve their performance.

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 METHODOLOGY OF THE STUDY

After reviewing the literature and conducting a pilot study a questionnaire

had been framed that is relevant to the priority set objectives.

SAMPLING

“A simple random sampling method was adopted to conduct the study”. The
universe for this study consists of all level employees. The sample consists of 120 in
number.

SOURCE OF DATA COLLECTION

1 Primary Data
2 Secondary Data

PRIMARY DATA
The data was collected by interviewing the employees. The investigator had to
sit with the employees and gather the information orally. The employees responded
simultaneously as the investigator.

SECONDARY DATA
This data can be collected through any indirect source of information. I
collected using the following:

 News Papers
 Books
 Websites.

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 LIMITATIONS OF THE STUDY

 Time is a limited factor to study about the project i.e.8 weeks.

 The employees may not reveal all the information due to some problems.
 The respondents may not respond to some typical questions in the
questionnaire.
 Interaction with the company executive was limited due to their busy
schedule.
 The information collected is mainly primary data and the accuracy is subject
to the response record.
 The study is limited to a particular area of BHARATH SANCHAR NIGAM
LIMITED (BSNL) RAJAHMUNDRY.
.

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 CHAPTERISATION

 The project has been organized into five chapters.

 The First Chapter introduces the concept of Compensation Management in
Bharath Sanchar Nigam Limited (BSNL), need, scope objectives,
methodology limitations and chapterization.
 The Second Chapter presents the appropriate Review of literature.
 The Third Chapter describes the profile of Industry and Company.
 The Fourth Chapter presents of the data and interpretation.
 The Fifth Chapter presents the Findings, Suggestions and Conclusion

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 REVIEW OF LITERATURE

Compensation management is the act of providing monetary value to an

employee for the work they do by means of a company process or policy. Some types
of compensation include salary, bonuses, and benefit packages. Companies use
compensation management in order to find, keep, and motivate employees to do
quality work

In simple terms, compensation is everything that a company offers its

employees in return for their talent and time. When organized the right way,
compensation dollars can be strategically leveraged to reduce turnover, boost
employee engagement and attract top talent. The purpose of compensation
management is to make the most of company dollars in a way that rewards employees
for their work

Matthew Freedman and Renata Kosova1 (2012) writes a paper entitled “Agency
and Compensation: Evidence from the Hotel Industry” in ‘The Journal of Law,
Economics, and Organization’ and examined how agency problems in the workplace
interact with compensation policies by taking advantage of the structure of the hotel
industry, in which many chains have both company-managed and franchised
properties. As residual claimants on their properties’ profits, franchisees have stronger
incentives to monitor employees than managers in company-managed hotels.
Exploiting this variation and using rich, longitudinal data on the hotel industry, the
effort has been made to estimate differences in wages and human resource practices
across company-managed and franchised hotels within chains as well as within
individual hotels as they change organizational form. The results suggest that the
timing of pay and the propensity to use performance-based incentives relate to the
extent of agency problems within establishments.

Yao-Hung Yang2 (2013) conducted a study and published a research paper entitled
“An Investigation of the Business Performance and Manager Compensation of
Taiwanese Non-FamilyControlled and Family-Controlled International Businesses” in
‘International Journal of Economics and Finance’. This study explores the problem of
the communities of interest that form when management and ownership overlap.

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Samples were obtained from the Taiwan Economic Journal (TEJ) data bank from
2005 to 2011. The result of non-family-controlled international businesses shows that
business accounting performance is improved when directors serve as managers;
however, if control rights exceed ownership rights to a great extent, business
accounting performance declines. The results of family-controlled international
businesses shows that directors who serve as managers can monitor compensation
effectively; however, if control rights exceeds the ownership rights to a great extent,
communities of interest can pursue selfish interests. In this study, suggested that
directors serve as managers to improve business performance and supervise
managers’ compensation. Moreover, controlling shareholders should serve as board
members with a certain proportion to prevent excessive interest assimilation.

AfrojaRehan Rima and Md. Rifayat Islam3 (2013) have written a paper “A Case
Study on Compensation System Practices in the Perspective of Telecom Industries of
Bangladesh” in ‘American International Journal of Research in Humanities, Arts and
Social Sciences’. Telecommunication sector in Bangladesh has always been leading
the way to initiate new products and services in the local marketplace. The total
strength of this sector depends on their employees stood at approximately 20,000 at
the end of the year. The telecom industry considers that a hefty, skillful and
enthusiastic employee is the key factor to success. The continual expansion of their
people is an essential factor in driving their growth ambitions. They place a strong
importance on how they are investing on their people and in people development,
building a strong performance culture and driving the right levels of motivation across
the organization. “People” are the central focus, which is why they maintain a very
strong Human Resource Managing Culture throughout their organizations. As they
give more focus on their employees and for that they want to do best for them through
motivation so that they will be able to perform in an efficient and effective way.
Though there were some dark sided regarding the full utilization of the process in the
perspective of Bangladesh; still the telecom industry in Bangladesh getting benefitted
from it. A good compensation system is very much effective for an organization;
whatever the industry. It creates an opportunity for the telecom industry in
Bangladesh’s employees as well for high involvement with the organization. Through
a strong and standardized compensation system, employee can compare themselves
with others. No compensation system can succeed without a clear, concise, and

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comprehensive communication plan. Every employee should make clear themselves
about the whole process to proceed for further and make them competent in such a
competitive market place. In this case study, a brief description of compensate issues
has been highlighted and finally build up a comparison between two leading telecom
companies in Bangladesh and make some effective recommendations.

Maria Joutsenvirta4 (2013) published a paper “Executive Pay and Legitimacy:

Changing Discursive Battles over the Morality of Excessive Manager Compensation”
in ‘Journal of Business Ethics’. This study investigated discursive processes through
which heavily contested executive pay schemes of the Finnish Energy Giant Forum
were constructed as (i) legitimate in public during 2005–2009. The critical discursive
analysis of media texts identified five legitimation strategies through which
politicians, journalists, and other social actors contested these schemes and, at the
same time, constructed subject positions for managers, politicians, and citizens. The
comparison of two debate periods surrounding the 2007–2008 financial crisis revealed
significant differences in the discursive strategies and the corresponding moral
struggles linked to legitimation of executive compensation. The analysis highlights a
change in moral reasoning by social actors as they adapt their justifications to a
changing social context. This study has important implications for our understanding
of the ethical aspects and sociopolitical embeddedness of manager compensation. In
particular, it adds to the knowledge of organizational legitimacy by showing how
discursive strategies and the corresponding morality constructions used to
(de)legitimate business activities can shift quickly as a result of a change in the social
and political climate surrounding the legitimating struggle.

Hang Le et al.5 (2013) conducted a study and published an article entitled

“Management Compensation Systems in MNCs and Domestic Firms: Cross-National
Empirical Evidence” in ‘Management International Review’ and it is a study of the
relationship between institutional settings and managerial compensation systems,
based on extensive cross-national survey evidence. The authors compared the
differences in practices between Multinational Corporations (MNCs) and domestic
firms across a range of capitalist archetypes. It was found that MNCs are more likely
to promote compensation systems that incentivize managers in line with
organizational performance compared to domestic firms. The findings also reveal
persistent diversity reflecting firm type and institutional setting. The authors find that

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the gap between MNCs and domestic firms in terms of the usage of incentive-related
compensation is less pronounced in Liberal Market Economies than in other settings.
This suggests that it is a combination of being an MNC and the specific home locale
that moulds approaches to managerial compensation. This reflects considerable
hybridization of practices within and between settings.

BijanAbedini et al.6 (2013) published a paper entitled “Analysis of the Relationship

between Managers’ Compensation and Earnings in Companies Listed in the Tehran
Stock Exchange” in “Journal of Educational and Management Studies”. The objective
of the paper is to study the relationship between managers’ compensation and
earnings in companies. It is a causal-analytic survey which is based on analysis of
panel data. In this study, the financial information on 112 companies listed in the
Tehran Stock Exchange from 2006 to 2010 is analyzed. It shall be mentioned that 560
companies were listed in the Tehran Stock Exchange each year. The SPSS 20,
EVIEWS 7 and MINITAB 16 software were used for analysis of the research results.
The results of the study shows that there is a significant direct relationship between
managers’ compensation and earning.

Yusuf Mohammed Nulla7 (2013) published “The Examination of Top Manager

Compensation System of NYSE Energy Companies” in ‘Strategic Management
Quarterly’. This study investigated CEO 18 compensation system of NYSE energy
companies. It tested the relationship between CEO compensation, firm size,
accounting firm performance, and corporate governance, from 2005 to 2010. The
totaled twenty five companies were selected through random sampling method from
NYSE index companies. The research question for this study was: is there a
relationship between CEO cash compensation, firm size, accounting performance, and
corporate governance? To answer this question, nine statistical models were created.
It was found that, there was a relationship between CEO salary, CEO bonus, total
compensation, firm size, accounting performance, and corporate governance. The
correlations between CEO salary, CEO bonus, CEO total compensation and firm size
were ranged from moderate to strong positive ratios. The correlations between CEO
compensation and firm performance were ranged from low negative to strong positive
ratios. The correlations between CEO compensation and corporate governance were
ranged from low negative to moderate positive ratios.

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Abbdul-Jaleel Saani8 (2013) writes on “Influence of Compensation and Supervision
on Private Basic School Teachers Work Performance in Ashaiman Municipality” in
‘International Journal of Business and Social Sciences’. This study investigated the
influence of compensation and teacher supervision on teacher work performance. A
total of 103 randomly selected private basic school heads and teachers in the
Ashaiman community of Tema, Ghana completed the questionnaire. Data for the
study were analyzed using multiple regression analysis. It was found out that
compensation and teacher supervision relate positively to teacher work performance;
however, the two variables do not directly predict work performance. They do so only
if teachers are satisfied with the forms of compensation available to them. It is
therefore recommended that management of private basic schools should design
attractive compensation packages for their teachers. They should also use appropriate
supervision strategies in their schools, as this increases teacher work performance.

Amit Hole and Ashutosh Misal9 (2013) published a paper entitled “Impact of
Compensation Strategies on Performance of Insurance Agents in General Insurance
Companies” in ‘Tactful Management Research Journal’. Since 1956, with the
nationalization of insurance industry, the LIC held the monopoly in India’s life
insurance sector, GIC, with its four subsidiaries, enjoyed the monopoly for general
insurance business. From 1991 onwards, the Indian Government introduced various
reforms in the financial sector paving the way for the liberalization of the Indian
economy. It was a matter of time before this liberalization affected the insurance
sector. Insurance being one of the segments of financial sector, it has in the recent
past gone through a transformation and change including the passing of IRDA
(Insurance Regulatory and Development Authority) Act 1999. Due to the IRDA Act
1999 the insurance sector has been opened up, the monopoly of government
companies has broken and many new private players have entered into the insurance
sector and thus the sector has become highly competitive with full of challenges.
Several factors account for new private general insurance companies speedily
penetrated in the market. Private companies develop new distribution channels. They
were having particular success in forging bank assurance alliances, through direct
marketing. This research paper analyzes impact of compensation policies on
performance of insurance agents for general insurance sector. It helps to improve the
market share of public sector general insurance company by improving performance

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of insurance agents by motivating them by technique of compensation management. It
provides a toolset for strategic remuneration planning that reflects organization
culture and pay strategies.

Rim Ben Hassen10 (2014) writes on “Executive Compensation and Earning

Management” in ‘International Journal of Accounting and Financial Reporting’.
Given the growing complexity of business, the need for financial reporting to include
more reliable information is increased. For this information to be relevant, they must
be conducted in an implementation of an efficient system of control to ensure a high
quality result. The directors of listed companies may be required to affect the quality
of accounting earnings as their compensation depends. Therefore, it would be wise to
examine the relationship between the elements of executive compensation and earning
management. The objective of this paper is to examine one of the motivations that
could encourage managers to manage the accounting results, namely the managerial
remuneration. The result of this study shows that executive compensation is
determined by the requirements of earning management. Specifically, our litters
indicate that total compensation is negatively related to the absolute value of accruals.
This result confirms the theoretical hypothesis alignment of interests of executives
with those of shareholders.

Roya Anvari et al.11 (2014) conducted a study and presented a paper entitled
“Mediating Effects of Affective Organizational Commitment and Psychological
Contract in the Relationship Between Strategic Compensation Practices and
Knowledge Sharing” in ‘International Conference on Innovation, Management and
Technology Research’. This study contributes to the development of the knowledge
management and strategic compensation literatures through developing the linkages
between them. The study sample comprised of 301 employees from universities of
medical sciences in Iran. Multiple and simple linear regression and path analysis were
used to test the direct and mediated relationships among the variables. Results
highlighted significant relationships between (a) strategic compensation practices and
affective organizational commitment (b) affective organizational commitment and
knowledge sharing (c) strategic compensation practices and psychological contract
and (d) psychological contract and knowledge sharing. The study revealed that
strategic compensation practices are positively related to affective organizational
commitment and psychological contract. In addition, the results provided evidence

24
that affective organizational commitment and psychological contract have a
significant mediating effect on the relationship between strategic compensation
practices and knowledge sharing. Managerial and practical implications of the
findings are highlighted. Grace

MwamburiOdhiambo and Esther Waiganjo12 (2014) examines the role of human

capital management strategies on the mobility of employees, specifically, the
influence of communication of corporate strategy, organizational alignment strategy,
compensation strategy and transformational leadership strategy on employee mobility.
It adopted a case study research and used a semistructured questionnaire to collect
data that was analyzed using Microsoft Excel and SPSS. The study’s findings
revealed that JKUAT had communicated its corporate strategy well as over 90% of
the respondents were aware of the vision and mission. Presence of transformational
leadership was also established. Organizational alignment was found to be non-
existent while compensation strategy emerged as the most prominent trigger for
employee mobility. The research recommends that the university considers utilizing
its ICT infrastructure and telephone as channels for disseminating strategy
information; incorporating the HR function in the university management board and
reviewing its compensation system for equity and alignment with responsibilities and
qualifications.

Uthra13 (2014) published an article entitled “A Study on Compensation

Management at Sri Steel Industries Limited, Coimbatore” in ‘The International
Journal of Business and Management’. In Today’s Dynamic Economy, with increased
corporate competition and the job uncertainty that follows hand in hand with mergers
and acquisitions, it is becoming ever more important to offer employees a benefits
package that they perceive to be of great value. Not only benefits packages help to
retain employees, they can help to attract qualified candidates to add to the workforce.
The sound compensation system is hallmark of organization’s success and prosperity.
The success and stability of organization is measured with pay-package it provides to
its employees. Compensation dissatisfaction can lead to absenteeism, turnover, job
dissatisfaction, low performance, strikes and grievances. Majority of labor-
management disputes relate to compensation. The objectives of the study are to study
the compensation management practices in the organization and also to identify the
type of compensation and analyze the satisfaction of workers with regard to

25
compensation. The study assumes the nature of descriptive research. The sample size
considered for the study is 50. The respondents are the employees of Sri Steel
Industries Limited, Coimbatore. The sampling technique used is Strata sampling. The
data is collected from the sample through Questionnaire method. The statistical tools
used for analysis are chiSquare and mean score. The mathematical tool used is
percentage analysis. It is found that most of the employees are satisfied with the
compensation policy followed at their organization and they are also satisfied with the
non-monetary benefits provided, basic pay, house rent allowance, dearness allowance
,conveyance allowance, medical benefits provided, over time allowance, travelling
allowance. The employees are dissatisfied with the leave rules laid. From the
chisquare analysis it is observed that there is no relationship between the no. of year’s
service and giving equal part in decision making process and it is also observed that
there is a significant relationship between the work performance of the employee and
the kind of compensation. It is recommended that management can consider the pay
revision at least once in every three years and as respondents are dissatisfied with the
leave rules of the organization management can laid down the leave rules in
consultation with the employees, if possible.

Nate Holdren14 (2014) published on “Incentivizing Safety and Discrimination:

Employment Risks under Workmen’s Compensation in the Early Twentieth Century
United States” in ‘Enterprise and Society’. This article takes criticisms of employment
discrimination in the aftermath of the creation of workmen’s compensation legislation
as a point of entry for arguing that compensation laws created new incentives for
employment discrimination. Compensation laws turned the costs of employees’
workplace accidents into a risk that many employers sought to manage by screening
job applicants in a manner analogous to how insurance companies screened policy
applicants. While numerous critics blamed insurers for discrimination, the author
argue that the problem was lack of insurance. The less that companies pooled their
compensation risks via insurance, the greater the incentives for employers to stop
employing people they would have previously been willing to hire.

Abdul Hameed et al.15 (2014) published “Impact of Compensation on Employee

Performance (Empirical Evidence from Banking Sector of Pakistan)” in ‘International
Journal of Business and Social Science’. Compensation is very important for the
performance of the employees. Therefore, they are very important for the organization

26
too. The purpose of this research is to measure the impact of compensation on
employee performance. A questionnaire was designed to collect the data on the
factors related to compensation like salary, rewards, Indirect Compensation and
employee performance. The data was collected from different banks of Pakistan. The
data collected were analyzed in SPSS 17.0 Version. Different analytical and
descriptive techniques were used to analyze the data. It is found from different results
that Compensation has positive impact on employee performance. It is proved from
correlation analysis that all the independent variables have weak or moderate positive
relationship to each other. Regression analysis shows that all the independent
variables have insignificant and positive impact on employee performance.
Descriptive analysis also reveals that all the independent variables have positive
impact on employee performance. ANOVA results reveal that education have not
same impact on employee performance. The major limitation of this research is that
this study only covers the banking sector of Punjab. Another limitation is that it
excludes many variables of compensation due to shortage of time. Funds were also
another limitation. Apart from these limitations this research may provide insights to
the managers to enhance the employee performance of their subordinates.

AvinashPawar and Charak16 (2014) writes and article entitled “A Study and
Review of Employee Value Proposition: A Tool of Human Resource Management” in
‘Review of Research’. The Employee Value Proposition (EVP) represents the
perceived overall deal between employer and employee. The employer makes an offer
to the employee (or the give) and expects contributions (or the get) from the employee
in return. The inducements and contributions consist of mutual obligations and
promises. Inducements typically concern things such as career progression,
organizational support, fair and transparent performance management and more
tangible things such as pay and holiday entitlements. Contributions relate to things
such as working hours, being an advocate of the employer within and outside the
organization, bringing skills, enthusiasm and entrepreneurship to productive work.
Importantly, within the overall deal there are nested deals operating at different levels
of the organization, such as the tailored, workable arrangements forged between team
leader and team members, these reflect opportunities available for employees to shape
their work experience. Topperforming companies create a sustainable EVP and total
rewards strategy based on the needs, demographics and preferences of their

27
workforce. Employee Value Proposition refers to the rewards and benefits that an
employee receives in return of the performance that he gives at the workplace in the
organization. Manpower planning is putting the right number of people, right kind of
people at the right 25 place, right time, doing the right things for which they are suited
for the achievement of organizational goals. EVP is at the core of all other
organizational processes. The characteristics of the EVP need to be reflected in the
corporate and employer brands. The EVP, if maintained well is the driver of
engagement, it informs recruitment messages and communications and it helps to
inform strategic HR priorities. It helps to support and drive business strategy forward.
People are the most important assets. Treat them like they make a difference and
they’ll make a difference. This paper takes the Review of Concept of Employee Value
Proposition and its relationship with Human Resource Management.

AdisaDelić and Amra Nuhanović17 (2014) published a paper entitled “Management

Compensation and the World Economic Crisis: Evidence from Bosnia and
Herzegovina” in ‘Asian Journal of Business Management’. In the published scientific
discussions the main factors – causes of crisis have been often analyzed. All those (up
to now) analyzed factors make the crisis long-lasting, harder, uncertain with hardly
predictable implications. On the other hand, understanding the cause and preventing
the consequences of crises are an important precondition of economic and social
development of any country. With regard to this, the main aim of research by the
authors is to explain the view according to which, the greed of Wall Street bankers
caused by excessive management compensation has also been, inter alia, one of the
relevant factors causing and deepening the 21st century world economic crisis.
Furthermore, the paperwork provides an overview of possible directions of regulation
in the field of management compensation, all with the aim to prevent large scale
crises in the future. Finally, to complete the research, the authors have analyzed the
state in the field of management compensation in Bosnia and Herzegovina.

Ofoegbu Onyema18 (2014) writes an article entitled “Assessing the Relationship

between Human Resource Management and Employee Job Satisfaction: A Case Study
of a Food and Beverage Company” in ‘Journal of Business Administration Research’.
The relationship between human resources management practice and Employee job
satisfaction has always been contentious. The study therefore, set out to examine and
indeed ascertain the true state of such relationship using the Nigerian Breweries as a

28
case study. Survey design was adopted in the gathering of the primary data.
Questionnaire was designed and administered on some staff of the organization. The
data gathered was analyzed using regression method and Pearson's correlation. The
result of the study indicates that recruitment and selection, training and development,
performance appraisal and compensation (human resources management practice
variables) jointly and independently predict job satisfaction. It is recommended that to
improve competitive ability organizations need to recruit and retain competent staff.
This can only be done through good human resource management practices.

TarusKipkorir Erick et al.19 (2014) published a paper entitled “The Relationship

between Executive Compensation and Financial Performance of Insurance Companies
in Kenya” in ‘Research Journal of Finance and Accounting’. This paper sought to
assess the effect of executive compensation on the financial performance of insurance
companies in Kenya. The study considered functional form relationship between the
level of executive remuneration and key performance ratios by using a regression
model that establishes the relationship between pay and financial performance. The
results show that there is a non-significant relationship between executive
compensation and financial performance, P-Value>0.05. The negative correlation
suggests the capping of executive compensation to maximize shareholders returns.
This advocates that key performance ratios are not key considerations in determining
executive compensation among the insurance companies in Kenya. Hence, there is
need to sensitize executives to align their payment to accounting performance
measures because they are directly linked to shareholder’s wealth maximization. The
study’s findings are useful to managers in insurance companies for strategic planning.
The arguments of this study are based on the agency theory and review of relevant
literature.

Alice ChepkorirMilgoet al.20 (2014) conducted a study and published a paper

entitled “Reward and Compensation as a Determinant of Employee Commitment: A
Survey of KTDA Tea Factories in Kenya” in ‘European Journal of Business and
Management’. The purpose of this study was to investigate the determinants of
employee commitment in tea organizations in Kenya. Strong commitment is
correlated with high productivity, while low commitment lowers productivity. The
primary objective of this research was to determine the influence of reward and
compensation on employee commitment in tea factories in Kenya. To achieve this

29
objective a survey was conducted to canvas the opinions of respondents in public
KTDA tea factories in Kenya. Purposive sampling was employed to select six (6)
factories based on second payment known as bonus; with three (3) high paying and
three (3) low paying. Stratified sampling technique was used to categorize population
into managers and employees. Random sampling was used to give the sample size of
employees. A total of 273 respondents were randomly selected from a population
frame of 861 employees. Qualitative and quantitative data was collected by use of
selfadministered structured questionnaires and interview schedule. Analysis of data
showed low paying factories had a lower average mean in all aspects of reward and
compensation 54.93 percent compared to high paying at average mean 71.60 percent.
Further analysis using Spearman’s rank correlation test revealed significant
relationship (P=0.00

30
 INDUSTRY PROFILE

Indian telecom sector is more than 165 years old. Telecommunications was
first introduced in India in 1851 when the first operational land lines were laid by the
government near Kolkata (then Calcutta), although telephone services were formally
introduced in India much later in 1881. Further, in 1883, telephone services were
merged with the postal system. In 1947, after India attained independence, all foreign
telecommunication companies were nationalized to form the Posts, Telephone and
Telegraph (PTT), a body that was governed by the Ministry of Communication. The
Indian telecom sector was entirely under government ownership until 1984, when the
private sector was allowed in telecommunication equipment manufacturing only. The
government concretized its earlier efforts towards developing R&D in the sector by
setting up an autonomous body – Centre for Development of Telemetric (C-DOT) in
1984 to develop state-of-the-art telecommunication technology to meet the growing
needs of the Indian telecommunication network. The actual evolution of the industry
started after the Government separated the Department of Post and Telegraph in 1985
by setting up the Department of Posts and the Department of Telecommunications
(Dot).

It began with the use of smoke signals and invention of telegraph in 1844
made possible wired communication, telephone enabled voice transmission. Follow
this advancement from smoke signals to modern day internet and mobile technology,
understanding the events that have shaped the world of telecommunications.

The history of telecommunication began with the use of smoke signals and drums in
Africa, the Americas and parts of Asia. In the 1790s, the first fixed semaphore
systems emerged in Europe; however it was not until the 1830s that electrical
telecommunication systems started to appear. This article details the history of
telecommunication and the individuals who helped make telecommunication systems
what they are today. The history of telecommunication is an important part of the
larger history of communication.

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Early Era:

Early telecommunications included smoke signals and drums. Talking drums were
used by natives in Africa, New Guinea and South America, and smoke signals in
North America and China. Contrary to what one might think, these systems were
often used to do more than merely announce the presence of a camp.

In 1792, a French engineer, Claude Chapel built the first visual telegraphy (or
semaphore) system between Lille and Paris. This was followed by a line from
Strasbourg to Paris. In 1794, a Swedish engineer, Abraham Edelcrantz built a quite
different system from Stockholm to Drottningholm. As opposed to Chapel’s system
which involved pulleys rotating beams of wood, Edelcrantz's system relied only upon
shutters and was therefore faster. However semaphore as a communication system
suffered from the need for skilled operators and expensive towers often at intervals of
only ten to thirty kilometers (six to nineteen miles). As a result, the last commercial
line was abandoned in 1880.

Telegraph System:

Telecommunications began with the successful innovation of Samuel Morse's

telegraph system in 1844. For three years, the U.S. Post Office ran the pioneering
Washington to Baltimore line. By that time other private telegraph companies had
developed (the first connected New York and Philadelphia) and were rapidly growing.
Telegraph expansion paralleled and aided the growth of the America’s network of
railroads. The latter provided a prepared right of way, while the former offered vital
communication links for the often single-track networks that moved people and
goods. The first coast-to-coast telegraph line was opened in 1862 (seven years before
rail links extended that far) and immediately made money, demonstrating the value of
telecommunications over great distances.

Early Corporate Alliances:

Western Union, the first telecommunications monopoly, was formed as a regional

alliance of several smaller firms in 1856 and rapidly expanded, often following
railway lines. Just a year later the six largest telegraph companies developed a cartel,
dividing up the country and business among themselves. The Civil War demonstrated
the value of telegraph links (the Union was far better equipped than the Confederacy)

32
and drove up rates and company profits. Western Union took over some 15,000 miles
of government-built lines at the end of the war and became by far the largest company
in the field.

International Telegraph Systems:

Telegraph systems initially served only land routes, as it was presumed impossible to
lay lines underwater. After experiments running insulated telegraph lines under lakes
and across rivers, in 1858 an American-led consortium laid the first cable connecting
Britain and the United States, which eventually failed in few months. After a failed
attempt to lay a cable in 1865, success came in 1866; soon others were added. The
Pacific was not crossed until 1902 because of the great distances involved.
Availability of global telegraphy rapidly changed the face of business and government
affairs. The ability to "instantly" communicate had great positive impact on business
and other human aspects of daily life.

Birth of Telephone:

Success of telegraph industry and rising electrical manufacturing businesses formed

the context for the telephone. The electric telephone was invented in the 1870s, based
on earlier work with harmonic (multi-signal) telegraphs. The first commercial
telephone services were set up in 1878 and 1879 on both sides of the Atlantic in the
cities of New Haven and London. The first telephone switchboard was placed in
service in New Haven, Connecticut, in early 1878, and demonstrated its greater
efficiency over individual lines between each customer. The first use of telephone
numbers and directories of telephone users appeared about the same time. Telephone
exchanges (using many switchboards) appeared about two decades later.

Telephone was largely the creation of Alexander Graham Bell, who received his first
patent in March 1876. Early development of the telephone was fraught with technical
and financial problems. Alexander Graham Bell held the master patent for the
telephone that was needed for such services in both countries. The technology grew
quickly from this point, with inter-city lines being built and telephone exchanges in
every major city of the United States by the mid-1880s.

Restricted by crude technology to providing local service (initial iron wires rarely
extended 100 miles), telephone service developed slowly before the Bell patents

33
expired in 1893. Initial Bell business strategy focused on licensing use of its patents
and selling equipment to companies building systems in cities and towns, largely to
serve business and the wealthy.

Mechanically Automated Telephone:

A Kansas City undertaker, concerned that telephone operators were sending business
to his competitors, developed the first mechanically automated telephone switch in
1891. The first automated switches began to appear around the turn of the century in
major cities—and would be used in smaller communities for decades. Copper
telephone lines were placed in use between Boston and New York, extending
telephone service to 300 miles. Around 1893, the country leading the world in
telephones per 100 persons (teledensity) was Sweden with 0.55 in the whole country
but 4 in Stockholm (10,000 out of a total of 27,658 subscribers). This compares with
0.4 in USA for that year. Telephone service in Sweden developed through a variety of
institutional forms: the International Bell Telephone Company (a U.S. multinational),
town and village co-operatives, the General Telephone Company of Stockholm (a
Swedish private company), and the Swedish Telegraph Department (part of the
Swedish government). Since Stockholm consists of islands, telephone service offered
relatively large advantages, but had to use submarine cables extensively. Competition
between Bell Telephone and General Telephone, and later between General
Telephone and the Swedish Telegraph Dept., was intense.

In 1893, the U.S. was considerably behind Sweden, New Zealand, Switzerland, and
Norway in teledensity. The U.S. rose to world leadership in teledensity with the rise
of many independent telephone companies after the Bell patents expired in 1893 and
1894.

20th Century Developments:

By 1904 there were over three million phones in the US, still connected by manual
switchboard exchanges. By 1914, the U.S. was the world leader in teledensity and had
more than twice the teledensity of Sweden, New Zealand, Switzerland, and Norway.
The relative good performance of the U.S. occurred despite competing telephone
networks not interconnecting.

34
For the next half century, the network behind the telephone grew progressively larger
and much more efficient, and after the rotary dial was added the instrument itself
changed little until touch-tone signaling started replacing the rotary dial in the 1960s.

Transatlantic Voice Communications:

Despite all these developments, transatlantic voice communication remained

impossible for customers until January 7, 1927, when a connection was established
using radio. However no cable connection existed until TAT-1 was inaugurated on
September 25, 1956 providing 36 telephone circuits. Transcontinental telephone
service became possible only around 1915 by use of amplifiers based on Lee De
Forest's "Audion" vacuum tube.

Coaxial Cable and Microwave Links:

Improved technology would begin to change the face of telecommunications after

1945. Paced by wartime needs and spending, Bell Labs and other researchers
produced coaxial cable and microwave links that were first used commercially in the
years after the war. No longer was it necessary to build an expensive
telecommunication network using copper wires. Microwave links required the use of
many antenna towers— and a license to use the high-frequency spectrum—but this
was less expensive than a traditional wired network. Coaxial cable offered the
broadband capacity needed to transmit thousands of telephone calls or full-motion
video.

Satellite Communications:

Development of satellite communication was first hinted at in a 1945 article by Arthur

C. Clarke in which he postulated a geostationary orbit 22,300 miles high that would
keep a satellite above the same part of Earth. Pushed by the cold war missile race, the
world's first artificial satellite came just 12 years later as the Soviet Union launched
Sputnik into a low Earth orbit in October 1957. Early military satellite
communications followed the same low-orbit path until the first commercial
geostationary satellites appeared in the 1970s.

35
Mobile Phones:

The history of mobile phones can be traced back to two-way radios permanently
installed in vehicles such as taxicabs, police cruisers, railroad trains, and the like.
Later versions such as the so-called transportable or "bag phones" were equipped with
a cigarette lighter plug so that they could also be carried, and thus could be used as
either mobile two-way radios or as portable phones by being patched into the
telephone network.

Bell Labs developed the notion of "cellular" systems allowing for frequency reuse
(and thus far greater capacity) and developed it through the 1970s. On April 3, 1973
Motorola manager Martin Cooper placed a cellular phone call (in front of reporters) to
Dr. Joel S. Engel, head of research at AT&T's Bell Labs. This began the era of the
handheld cellular mobile phone. Meanwhile the 1956 inauguration of the TAT-1 cable
and later international direct dialing were important steps in knitting together the
various continental telephone networks into a global network. The FCC approved
operation of an analog cellular mobile telephone system in 1982, sparking a new
growth sector.

Cable Television Companies:

Cable television companies began to use their fast-developing cable networks, with
ducting under the streets of the United Kingdom, in the late 1980s, to provide
telephony services in association with major telephone companies. One of the early
cable operators in the UK, Cable London, connected its first cable telephone customer
in about 1990.

Digital Technology:

Digital technology first appeared in American telecommunications with AT&T's

introduction of its T1 Carrier System in 1962. A T1 line offered far more capacity and
a cleaner (less noisy) signal. Soon digital telephone switches appeared, allowing for
more flexible network design and operation. But the most sweeping change came with
the installation of fiber-optic cables to carry voice, data, and video signals. The huge
carrying capacity of fiber—constantly rose with further technical improvements—
finally placed telecommunication networks well ahead of projected growth (and
planted the seeds for disaster in the early 2000s).

36
The Internet:

On September 11, 1940, George Stibnite was able to transmit problems using teletype
to his Complex Number Calculator in New York and receive the computed results
back at Dartmouth College in New Hampshire. This configuration of a centralized
computer or mainframe with remote dumb terminals remained popular throughout the
1950s. However it was not until the 1960s that researchers started to investigate
packet switching — a technology that would allow chunks of data to be sent to
different computers without first passing through a centralized mainframe. A four-
node network emerged on December 5, 1969 between the University of California,
Los Angeles, the Stanford Research Institute, the University of Utah and the
University of California, Santa Barbara. This network would become ARPANET,
which by 1981 would consist of 213 nodes. In June 1973, the first non-US node was
added to the network belonging to Norway's NORSAR project. This was shortly
followed by a node in London.

Two popular link protocols for local area networks (LANs) also appeared in the
1970s. Internet access became widespread late in the century, using the old telephone
and television networks. The Internet, based on government networks dating back to
1969, became a widely used public network in 1995. Development of the World Wide
Web and the graphic user interface making it possible opened up a wealth of
expanding information resources and growing public acceptance. By the early 2000s,
more than half of American households were connected to the Internet, a slowly
growing number of them linked by broadband connections. Projections of Internet
growth sparked bullish plans for the underlying telecommunication services and
manufacturing that made the Web possible. Many of those projections were wide of
the reality.

Internet Protocol (IP) Telephony:

Internet Protocol (IP) telephony (also known as 'Internet telephony') is a service based
on the Voice over IP communication protocol (VoIP), a disruptive technology that is
rapidly gaining ground against traditional telephone network technologies. In Japan
and South Korea up to 10% of subscribers switched to this type of telephone service
as of January 2005.

37
IP telephony uses a broadband Internet connection to transmit conversations as data
packets. In addition to replacing the traditional Plain Old Telephone Service POTS
system, IP telephony is also competing with mobile phone networks by offering free
or lower cost connections via Wi-Fi hotspots. VoIP is also used on private wireless
networks which may or may not have a connection to the outside telephone network.
Imperatives of Telecommunication Industry-

Telecommunications industry continues to grow steadily on a global scale. The

most important imperatives shaping the modern telecommunications industry are
globalization (world wide scale), technology (latest advancements) and deregulation.
This article briefly discusses these three imperatives.

Globalization:

The first factor shaping the telecommunication industry to what it is today is

globalization. The telecommunications industry transports information at such
incredible speeds that concept of virtual world has become true. Users can stay
connected on a global scale without travelling and can collaborate in virtual world
enabled by telecommunication industry. Telecommunications has become
tremendously important to successful operation of almost every organization around
the world, large or small, in both the public and private sector and for most of the
trans-border organizations it is the backbone of their business. Discussions of
globalization, the Internet, and e-commerce typically emphasize the increasing pace
of change happening today.

Technological Innovation:

The second factor influencing the telecommunication industry greatly is technological

advances. Technological advances in the recent times have dramatically changed the
dynamics of players involved in the telecommunications infrastructure, equipment
and services sectors. Advancements and innovations are being made in all sectors of
telecommunications industry, wireless technology, internet, and satellite
communications being the forerunners. So are changing the needs, demands and
expectations of global consumers and industry need to keep pace by creating products
and services meeting these demands. Satellites and optical fibers, among other

38
technologies, contribute significantly to the globalization of telecommunications
services.

Deregulation:

Deregulation has changed the telecommunications industry by transforming local and

long distance monopolies into highly competitive suppliers of communications
offerings. The Telecommunications Act of 1996 in the United States coincided with
decreased regulations in countries around the world. The Telecommunications Act
removed regulatory barriers to entry, opening up the market to new competitors.
Deregulation led to a large number of new companies entering the market, which in
turn, led to increased competition. Cable and Internet companies began offering
telephone service while traditional fixed-line providers began offering Internet and
television services.

EVOLUTION OF TELECOM INDUSTRY

39
 Telecom Industry & Globalization

The first factor shaping the telecommunication industry to what it is

today is globalization. The telecommunications industry transports information at
such incredible speeds that concept of virtual world has become true. This article will
discuss impact of globalization and the risks and opportunities it present to the
industry.

The first factor shaping the telecommunication industry to what it is today is

globalization. The telecommunications industry transports information at such
incredible speeds that concept of virtual world has become true. Users can stay
connected on a global scale without travelling and can collaborate in virtual world
enabled by telecommunication industry. Telecommunications has become
tremendously important to successful operation of almost every organization around
the world, large or small, in both the public and private sector and for most of the
trans-border organizations it is the backbone of their business. Discussions of
globalization, the Internet, and e-commerce typically emphasize the increasing pace
of change happening today.

The traditional distinction between local and long-distance telephone service, as well
as the demarcation between voice, record, data, and video services, is fast
disappearing. Internet has reached to one third of the world population. There exists 5
billion wireless subscribers still growing at a fast pace. Comparable changes are
taking place on the international scene as the conventional separation between local,
national, and global communications is being eroded and as integrated
telecommunications usage readily transcends national boundaries.

International communications is the fastest growing segment of the total

communications industry. It is estimated that global traffic would appear to reflect the
same type of usage concentration that exists in domestic long-distance traffic, in
which 20 percent of business customer’s account for 80 percent of business revenues.
Global telecommunications will have a significant impact on the growth rates of both
industrialized and developing nations.
40
Many telecommunications providers have strong incentives to expand operations
across nations. By expanding internationally they can exploit core competencies
across a larger set of opportunities because emergence of global network equipment
markets and a trend toward deregulation, technical competencies in network
operations and services are now having increased global applicability. Global
customers will demand services that are well integrated across national borders in
both technical and customer-service dimensions.

Globalization also provides an opportunity to diversify the risk. In addition to general

macroeconomic and political risks, communications industry growth rates are likely
to vary significantly across countries. Still there exists opportunity to explore
telephony service as telephone penetration rates worldwide are still low compared to
some of the countries. Telephony is a well-established service that brings value to
customers from many different backgrounds and cultures; there is huge potential for
telephony service growth around the globe. To lessen the risks of any particular
country achieving its growth potential, businesses linked to telephony service growth
can position themselves to exploit growth that might occur in other countries.

Companies who are participating in international commerce have to deal with

important cultural differences and also the absence of a common internationally
applicable legal framework. Such differences are particularly significant in
telecommunications markets because the services exchanged are complex and the
regulatory framework is crucial. Globalizing a company is also a means to lessen
transaction costs and to facilitate quicker reactions to new business opportunities.

During the last decade "globalization" was more of a slogan than a reality, since it
referred mainly to alliances between major operators to provide end-to-end services to
multinational enterprises. Public networks and residential customers were relatively
unaffected by this kind of globalization. In the current decade globalization has
already become much more of a reality and in future it is going to be possible for
foreign operators to have direct access through interconnection and interoperability to
public networks in most of the world's major telecommunication markets, as well as
to make direct investments in the development of those networks.

41
Employment

The Indian telecommunication industry employs over 400,000 direct employees and
about 85% of these employees are from government-owned companies. The ratio of
number of subscribers to employees, an indication of efficiency and profitability, is
much higher for private companies than for government companies.

Growth of IT-ITeS and Financial Sector

India has entered the league of countries with the most-advanced telecommunication
infrastructure after the industry was deregulated. Furthermore, deregulation has
stimulated India’s economic growth through industry growth and through rise in
investments. It is evident that a well-developed communication sector improves
access to social networks, lowers transaction costs, increases economic opportunities,
widens markets, and provides better access to information, healthcare and
educational services. The growth in Indian telecom sector has been concomitant with
overall growth in GDP, government revenue, employment et al. Besides,
telecommunication has increased efficiency, reduced transaction costs, attracted
investments and has created new opportunities for business and employment.

The NTP-99 was particularly helpful for the ITeS-BPO industry as it ended the
government monopoly in international calling by introducing IP telephony. After the
introduction of IP telephony, there was rapid growth in the number of data
processing centers and inbound/outbound call centers, which ultimately led to the
outsourcing revolution in India.

The telecom sector has been instrumental in creating jobs for a vast pool of talented
and knowledge professionals in the IT and ITeS-BPO industry, which thrives on
reliable telecommunication infrastructure. India has become an important
outsourcing destination for the world and the boom in this sector also has
transformed India’s economic dynamics. The evolution of telecom sector has brought
about a revolutionary change in the way some businesses operate.

Another beneficiary of the telecom revolution is the financial services industry,

which has been on a growth trajectory. The progress and quality of the financial

42
sector has been a key factor that has driven the pace and diversity of the real
economy. India has an extensive and well-developed financial sector with wide and
sophisticated banking network. Banking in India has become service-oriented, and
has matured greatly from the days of walk-in customers to the present situation when
banks have migrated to a 24-hour banking platform to attract customers; however,
this disintermediation in the business has led banks to be extremely prudent in terms
of their internal operations and has led them to adopt newer products and delivery
channels. Further, with introduction of internet & mobile banking the long ques at
the banks are slowly becoming a thing of the past.

Both the financial and the IT-ITeS segments rely on good domestic as well as
international network connectivity; therefore, there is a need for a sound
telecommunication network.

Factors Facilitating Growth of the Sector

The phenomenal growth in the Indian telecom industry was brought about by the
wireless revolution that began in the nineties. Besides this, the following factors also
aided the growth of the industry.

Liberalization

The relaxation of telecom regulations has played a major role in the development of
the Indian telecom industry. The liberalization policies of 1991 and the consequent
influx of private players have led the industry on a high growth trajectory and have
increased the level of competition. Post-liberalization, the telecom industry has
received more investments and has implemented higher technology.

Increasing Affordability of Handsets

The phenomenal growth in the Indian telecom industry was predominantly aided by
the meteoric rise in wireless subscribers, which encouraged mobile handset
manufacturers to enter the market and to cater to the growing demand. Further, the
manufacturers introduced lower-priced handsets with add-on facilities to cater to the
increasing number of subscribers from different strata of the society. Now even
entry-level handsets come with features like colored display and FM radio. Thus, the

43
falling handset prices and the add-on features have triggered growth of the Indian
telecom industry.

Prepaid Cards Bring in More Subscribers

In the late nineties, India was introduced to prepaid cards, which was yet another
milestone for the wireless sector. Prepaid cards lured more subscribers into the
industry besides lowering the credit risk of service providers due to its upfront
payment concept. Prepaid cards were quite a phenomenon among first-time users
who wanted to control their bills and students who had limited resources but greater
need to be connected. Pre-paid cards greatly helped the cellular market to grow
rapidly and cater to the untapped market. Further, the introduction of innovative
schemes like recharge coupons of smaller denominations and life time incoming free
cards has led to an exponential growth in the subscriber base.

Introduction of Calling Party Pays (CPP)

The CPP regime was introduced in India in 2003 and under this regime, the calling
party who initiated the call was to bear the entire cost of the call. This regime came
to be applicable for mobile to mobile calls as well as fixed line to mobile calls. So far
India had followed the Receiving Party Pays (RPP) system where the subscriber used
to pay for incoming calls from both mobile as well as fixed line networks. Shifting to
the CPP system has greatly fuelled the subscriber growth in the sector.

Changing Demographic Profile

The changing demographic profile of India has also played an important role in
subscriber growth. The changed profile is characterized by a large young population,
a burgeoning middle class with growing disposable income, urbanization, increasing
literacy levels and higher adaptability to technology. These new features have
multiplied the need to be connected always and to own a wireless phone and
therefore, in present times mobiles are perceived as a utility rather than a luxury.

44
Increased Competition & Declining Tariffs

Liberalization of the telecom industry has fuelled intense competition, especially in

the cellular segment. The ever-increasing competition has led to high growth of
subscribers and has put pressure on tariffs, which have seen a sharp drop over the
years. When the cellular phones were introduced, call rates were at a peak of Rs 16
per minute and there were charges for incoming calls too. Today, however, incoming
calls are no longer charged and outgoing calls are charged at less than a rupee per
minute. Thus, the tariff war has come a long way indeed. Increased competition and
the subsequent tariff war has acted as a major catalyst for attracting more subscribers.
Apart from these major growth drivers, an improved network coverage, entry of
CDMA players, growth of value-added services (VAS), advancement in technology,
and growing data services have also driven the growth of the industry.

Outlook

The telecom industry in India has experienced exponential growth over the past few
years and has been an important contributor to economic growth; however, the cut-
throat competition and intense tariff wars have had a negative impact on the revenue
of players. Despite the challenges, the Indian telecom industry will thrive because of
the immense potential in terms of new users. India is one of the most-attractive
telecom markets because it is still one of the lowest penetrated markets. The
government is keen on developing rural telecom infrastructure and is also set to roll
out next generation or 3G services in the country. Operators are on an expansion
mode and are investing heavily on telecom infrastructure. Foreign telecom
companies are acquiring considerable stakes in Indian companies. Burgeoning
middle class and increasing spending power, the government’s thrust on increasing
rural telecom coverage, favorable investment climate and positive reforms will
ensure that India’s high potential is indeed realized.

India - Key Statistics, Telecommunications Market and Regulatory Overview

Despite setbacks, India continues to be one of the fastest growing major telecom
markets in the world. It is also one of the largest. Sweeping reforms introduced by
successive Indian governments over the last decade have dramatically changed the

45
 nature of telecommunications in the country. The mobile sector had grown from
around 10 million subscribers in 2002 to pass the 900 million mark in early 2012.
Events in 2012 were to see a ‘correction’ in the local telecom market, but, overall,
growth has been continuing. GSM technology dominates the mobile market, while
CDMA manages to somehow cling to a declining market share. Growth in the mobile
industry was expected to continue at least into the medium term, boosted by the
allocation of 3G/4G licenses and the subsequent large scale roll-out of these networks.

On the other hand the impact of the major scandal over the awarding of 2G licenses in
2008 was certainly not good news for the mobile industry. Court decisions and the
subsequent responses of the regulators were central to the eventual outcome. Re-
auctioning of the 2G mobile licenses went some way to settling the market, but much
more needs to be done in this regard. By 2015 there were positive signs of a healthier
regulatory environment taking shape. The government has been continuing to push to
complete the restructuring of the telecommunications regulatory regime. The fixed-
line market, which had grown strongly for a while, began experiencing zero and then
negative growth. In terms of online access, there has been a fresh effort to promote
broadband internet throughout the country; after a period in which broadband
development languished, there was new hope for a serious expansion phase in this
segment of the market. Mobile broadband has also impacted the market and by 2015
was already dramatically changing the internet sector.

This report presents the key measures and takes a general look at India’s telecom
market together with the direction it is heading. It also considers the evolving
regulatory landscape.

Key developments:
 overall growth in India’s telecom market remains fundamentally strong; but the
huge mobile market has been going through a period of uncertainty;
 the consequences of the 2G corruption scandal have continued to impact on the
industry;
 mobile broadband services have breathed fresh life into the broadband sector,
helping increase broadband penetration across the market;
 the government removed the Foreign Direct Investment (FDI) cap on telecom
investment;
46
 spectrum fees continued to be a controversial issue with a major argument about
the impact of the March 2015 auctions on tariffs and the financial situation of the
operators;
 India’s mobile subscriber base grew by 7% in 2014 and was growing at a similar
rate in 2015;
 mobile penetration had reached 77%, with room for further growth;
 mobile ARPUs appeared to be stabilizing and even seeing modest growth;
 India has overhauled Japan to become the world’s third largest Smartphone
market;
 new player Reliance Jio was preparing to launch its 4G network by early 2016;
 Bharti Airtel cancelled its plans to purchase the assets and subscribers of Loop
Mobile;
 This left Loop in an impossible situation, inevitably exiting the market.

National Telecom Policy, 1994

Introduction:
1.The new economic policy adopted by the Government aims at improving India's
competitiveness in the global market and rapid growth of exports. Another element of
the new economic policy is attracting foreign direct investment and stimulating
domestic investment. Telecommunication services of world class quality are
necessary for the success of this policy. It is, therefore, necessary to give the highest
priority to the development of telecom services in the country.

Objectives:
The objectives of the New Telecom Policy will be as follows :

 The focus of the Telecom Policy shall be telecommunication for all and
telecommunication within the reach of all. This means ensuring the availability of
telephone on demand as early as possible.
 Another objective will be to achieve universal service covering all villages as early
as possible. What is meant by the expression universal service is the provision of
access to all people for certain basic telecom services at affordable and reasonable
prices.

47
 The quality of telecom services should be of world standard. Removal of consumer
complaints, dispute resolution and public interface will receive special attention.
The objective will also be to provide widest permissible range of services to meet
the customer's demand at reasonable prices.
 Taking into account India's size and development, it is necessary to ensure that
India emerges as a major manufacturing base and major exporter of telecom
equipment.
 The defense and security interests of the country will be protected.

National Telecom Policy - objectives and achievements

In 1994, the Government announced the National Telecom Policy which defined
certain important objectives, including availability of telephone on demand, provision
of world class services at reasonable prices, ensuring India's emergence as major
manufacturing / export base of telecom equipment and universal availability of basic
telecom services to all villages. It also announced a series of specific targets to be
achieved by 1997. As against the NTP 1994 target of provision of 1 PCO per 500
urban population and coverage of all 6 lack villages, DoT has achieved an urban PCO
penetration of 1 PCO per 522 and has been able to provide telephone coverage to only
3.1 lac villages. As regards provision of total telephone lines in the country, DoT has
provided 8.73 million telephone lines against the eighth plan target of 7.5 million
lines. NTP 1994 also recognized that the required resources for achieving these
targets would not be available only out of Government sources and concluded that
private investment and involvement of the private sector was required to bridge the
resource gap. The Government invited private sector participation in a phased manner
from the early nineties, initially for value added services such as Paging Services and
Cellular Mobile Telephone Services (CMTS) and thereafter for Fixed Telephone
Services (FTS). After a competitive bidding process, licenses were awarded to 8
CMTS operators in the four metros, 14 CMTS operators in 18 state circles, 6 BTS
operators in 6 state circles and to paging operators in 27 cities and 18 state circles.
VSAT services were liberalized for providing data services to closed user groups.
Licenses were issued to 14 operators in the private sector out of which only nine
licensees are operational. The Government has recently announced the policy for
Internet Service Provision (ISP) by private operators and has commenced licensing of
the same. The Government has also announced opening up of Global Mobile Personal
48
Communications by Satellite (GMPCS) and has issued one provisional license. Issue
of licenses to other prospective GMPCS operators is under consideration.

The Government recognizes that the result of the privatization has so far not
been entirely satisfactory. While there has been a rapid rollout of cellular mobile
networks in the metros and states with currently over 1 million subscribers, most of
the projects today are facing problems. The main reason, according to the cellular and
basic operators, has been the fact that the actual revenues realized by these projects
have been far short of the projections and the operators are unable to arrange
financing for their projects and therefore complete their projects. Basic telecom
services by private operators have only just commenced in a limited way in two of the
six circles where licenses were awarded. As a result, some of the targets as envisaged
in the objectives of the NTP 1994 have remained unfulfilled. The private sector entry
has been slower than what was envisaged in the NTP 1994.

The government views the above developments with concern as it would adversely
affect the further development of the sector and recognizes the need to take a fresh
look at the policy framework for this sector.

Need for a new telecom policy

In addition to some of the objectives of NTP 1994 not being fulfilled, there have also
been far reaching developments in the recent past in the telecom, IT, consumer
electronics and media industries world-wide. Convergence of both markets and
technologies is a reality that is forcing realignment of the industry. At one level,
telephone and broadcasting industries are entering each other's markets, while at
another level, technology is blurring the difference between different conduit systems
such as wire line and wireless. As in the case of most countries, separate licences have
been issued in our country for basic, cellular, ISP, satellite and cable TV operators
each with separate industry structure, terms of entry and varying requirement to create
infrastructure. However this convergence now allows operators to use their facilities
to deliver some services reserved for other operators, necessitating a relook into the
existing policy framework. The new telecom policy framework is also required to
facilitate India's vision of becoming an IT superpower and develop a world class
telecom infrastructure in the country.

49
 Objectives and targets of the New Telecom Policy 1999

The objectives of the NTP 1999 are as under:

 Access to telecommunications is of utmost importance for achievement of the

country's social and economic goals. Availability of affordable and effective
communications for the citizens is at the core of the vision and goal of the telecom
policy.
Strive to provide a balance between the provision of universal service to all
uncovered areas, including the rural areas, and the provision of high-level services
capable of meeting the needs of the country's economy; Encourage development
of telecommunication facilities in remote, hilly and tribal areas of the country;
 Create a modern and efficient telecommunications infrastructure taking into account
the convergence of IT, media, telecom and consumer electronics and thereby propel
India into becoming an IT superpower;
 Convert PCO's, wherever justified, into Public Teleinfo centers having multimedia
capability like ISDN services, remote database access, government and community
information systems etc.
 Transform in a time bound manner, the telecommunications sector to a greater
competitive environment in both urban and rural areas providing equal
opportunities and level playing field for all players;
 Strengthen research and development efforts in the country and provide an impetus
to build world-class manufacturing capabilities
 Achieve efficiency and transparency in spectrum management
 Protect the defense & security interests of the country
 Enable Indian Telecom Companies to become truly global players.

In line with the above objectives, the specific targets that the NTP 1999 seeks to
achieve would be:

 Make available telephone on demand by the year 2002 and sustain it thereafter so as
to achieve a teledensity of 7 by the year 2005 and 15 by the year 2010
 Encourage development of telecom in rural areas making it more affordable by
suitable tariff structure and making rural communication mandatory for all fixed
service providers.

50
 Increase rural teledensity from the current level of 0.4 to 4 by the year 2010 and
provide reliable transmission media in all rural areas
 Achieve telecom coverage of all villages in the country and provide reliable media
to all exchanges by the year 2002
 Provide Internet access to all district head quarters by the year 2000
 Provide high speed data and multimedia capability using technologies including
ISDN to all towns with a population greater than 2 lack by the year 2002

New Policy Framework

The New Policy Framework must focus on creating an environment, which enables
continued attraction of investment in the sector and allows creation of communication
infrastructure by leveraging on technological development. Towards this end, the
New Policy Framework would look at the telecom service sector as follows '

 Cellular Mobile Service Providers, Fixed Service Providers and Cable Service
Providers, collectively referred to as 'Access Providers'
 Radio Paging Service Providers
 Public Mobile Radio Trucking Service Providers
 National Long Distance Operators
 International Long Distance Operators
 Other Service Providers
 Global Mobile Personal Communication by Satellite (GMPCS) Service Providers
 V-SAT based Service Providers

Broadband Policy 2004

Preamble
Recognizing the potential of ubiquitous Broadband service in growth of GDP and
enhancement in quality of life through societal applications including tele-education,
tele-medicine, e-governance, entertainment as well as employment generation by way
of high speed access to information and web-based communication, Government have
finalized a policy to accelerate the growth of Broadband services.

Demand for Broadband is primarily conditioned and driven by Internet and PC

penetration. It is recognized that the current level of Internet and Broadband access in
the country is low as compared to many Asian countries. Penetration of Broadband,

51
Internet and Personal Computer (PC) in the country was 0.02%, 0.4% and 0.8%
respectively at the end of December, 2003. Currently, high speed Internet access is
available at various speeds from 64 kilobits per second (kbps) onwards and presently
an always-on high speed Internet access at 128 kbps is considered as 'Broadband'.
There are no uniform standards for Broadband connectivity and various countries
follow various standards.

Government envision an accelerated growth in Internet penetration and PC as the

success of Broadband would largely be dependent on their spread. It has been decided
that following shall be the framework of the policy.

Telecom Regulatory Authority of India(TRAI) Act, 1997

Strengthening of Regulators
With the entry of private sector in the provision of telecommunication services a need
was felt to have an independent regulatory body. The above requirement was
indicated in the guidelines issued for entry of private sector in basic telecom service.
Accordingly, Telecom Regulatory Authority of India (TRAI) was established in the
year 1997 in pursuance of TRAI (Ordinance) 1997, which was later replaced by an
Act of Parliament, to regulate the telecommunication services. Some of the major
recommendatory, regulatory and tariff setting functions of TRAI are to make
recommendations on the need and timing for introduction of new service provider, on
the terms and conditions of license to a service provider, ensure compliance of terms
and conditions of license, effective management of spectrum, lay down the standards
of quality of service to be provided by the service providers and ensure the quality of
service and conduct the periodical survey of such service provided by the service
providers so as to protect interest of the consumers of telecommunication service,
ensure effective compliance of Universal Service Obligations, notify the rates at
which telecommunication services within India and outside India shall be provided
under this Act etc. In exercise of powers conferred by proviso (k) to sub-section (1)
of Section 2 of the TRAI Act, the Central Government, vide Notification No. SO
44(E) dated 9th January, 2004, has notified broadcasting and cable services to be
telecommunication service.

52
 Telecom Dispute Settlement and Appellate Tribunal (TDSAT)

An Appellate Tribunal, known as Telecom Disputes Settlement and Appellate

Tribunal (TDSAT), was established by the Central Government in May, 2000 to
adjudicate any dispute between a licensor and a licensee; between two or more service
providers; between a service provider and a group of consumers; and to hear and
dispose of appeal against any direction, decision or order of the Telecom Regulatory
Authority of India. The Tribunal, therefore, exercise both original and appellate
jurisdiction. An appeal has been provided against the final order of the Appellate
Tribunal to the Supreme Court under Section 18 of the Act. However, there is no
appeal against the interlocutory orders of the Appellate Tribunal to the Supreme
Court. Section 14-B (1) of the Act, 1997, lays down that the Appellate Tribunal shall
consist of a Chairperson and not more than two Members to be appointed, by
Notification, by Central Government.

Broadly, the issues involved in cases filed before the Appellate Tribunal relate to
interconnection, challenging the basis of computation of license fee by the licensor,
wrongful levy and charge of royalty and license fee for frequency allocation, blocking
of calls by one group of service providers, disputes relating to default traffic,
challenges to tariff fixed by TRAI, encashment of bank guarantees, disputes between
broadcasters etc.

India is currently the world’s second-largest telecommunications market and has

registered strong growth in the past decade and half. The Indian mobile economy is
growing rapidly and will contribute substantially to India’s gross domestic product
(GDP), according to report prepared by GSM Association (GSMA) in collaboration
with the Boston Consulting Group (BCG).
The liberal and reformist policies of the Government of India have been instrumental
along with strong consumer demand in the rapid growth in the Indian telecom sector.
The government has enabled easy market access to telecom equipment and a fair and
proactive regulatory framework that has ensured availability of telecom services to
consumer at affordable prices. The deregulation of foreign direct investment (FDI)
norms has made the sector one of the fastest growing and a top five employment
opportunity generator in the country.
PRESENT SCENARIO:

53
 India is currently the world’s second-largest telecommunications market and
has registered strong growth in the past decade and half. The Indian mobile economy
is growing rapidly and will contribute substantially to India’s gross domestic product
(GDP), according to report prepared by GSM Association (GSMA) in collaboration
with the Boston Consulting Group (BCG).
The liberal and reformist policies of the Government of India have been
instrumental along with strong consumer demand in the rapid growth in the Indian
telecom sector. The government has enabled easy market access to telecom equipment
and a fair and proactive regulatory framework that has ensured availability of telecom
services to consumer at affordable prices. The deregulation of foreign direct
investment (FDI) norms has made the sector one of the fastest growing and a top five
employment opportunity generator in the country.

Market Size
Driven by strong adoption of data consumption on handheld devices, the
total mobile services market revenue in India is expected to touch US$ 37 billion in
2017, registering a Compound Annual Growth Rate (CAGR) of 5.2 per cent between
2014 and 2017, according to research firm IDC.India's mobile subscriber base is
expected to cross 500 million! subscribers by the end of FY2015 from 453 million
subscribers at the end of FY2014.
According to a study by GSMA, smart phones are expected to account for
two out of every three mobile connections globally by 2020 making India the fourth
largest smart phone market. The broadband services user-base in India is expected to
grow to 250 million connections by 2017, according to GSMA.India added the
highest number of net mobile phone subscriptions of 13 million during the third
quarter of 2015@.
International Data Corporation (IDC) predicts India to overtake US as the
second-largest Smartphone market globally by 2017 and to maintain high growth rate
over the next few years as people switch to smart phones and gradually upgrade to
4G.
In spite of only 5 per cent increase in mobile connections in 2015, overall expenditure
on mobile services in India is expected to increase to US$ 21.4 billion in 2015, led by
15 per cent growth in data services expenditure, as per research firm Gartner.

54
 The Indian telecom sector is expected to generate four million direct and
indirect jobs over the next five years according to estimates by Ramstad India. The
employment opportunities are expected to be created due to combination of
government’s efforts to increase penetration in rural areas and the rapid increase in
Smartphone sales and rising internet usage.

Investment
With daily increasing subscriber base, there have been a lot of investments and
developments in the sector. The industry has attracted FDI worth US$ 17.7
billion during the period April 2000 to September 2015, according to the data released
by Department of Industrial Policy and Promotion (DIPP).
Some of the major developments in the recent past are:
 Wal-Mart India Private Limited's president has shown interest in opening its chain of
stores in Haryana, while Micromax has also offered to set up a mobile handset
manufacturing unit in the National Capital Region (NCR).
 Vodacom SA, a subsidiary of Vodafone Plc, has entered into an agreement with Tata
Communications Ltd to buy the fixed-line assets of TataComm's South African
telecom subsidiary Neotel Pty Ltd.
 Bharti Airtel has planned to invest Rs 60,000 crore (US$ 9.02 billion) over a period of
three years with a view to boost its telecom network capacity thereby improving the
quality of voice and data services to its customers.
 Reliance Communications Ltd, India’s fourth largest mobile services provider, has
agreed to acquire Sistema Shyam TeleServicess Ltd (SSTL), the local unit of Russian
company Sistema JSFC, in a deal valued at Rs 4,500 crore (US$ 687 million), which
includes payments to the government for spectrum allotted to Sistema.
 Videocon Industries Ltd plans to set up a mobile handset assembly plant along with
manufacturing set top boxes in Punjab for an investment of Rs 500 crore (US$ 76.7
million) over three years.
 American Tower Corporation, a New York Stock Exchange-listed mobile
infrastructure firm, has acquired 51 per cent stake in telecom tower company Viom
Networks in a deal worth Rs 7,635 crore (US$ 1.17 billion).
 Chinese smart phone maker OnePlus has announced its partnership with Foxconn, a
Taiwanese company, for assembling its phones in Falcon’s factory in Andhra
Pradesh.
55
 Swedish telecom equipment maker Ericsson has announced the introduction of a new
radio system in the Indian market, which will provide the necessary infrastructure
required by mobile companies in order to provide fifth-generation (5G) services in
future.
 Out of the total number of smart phones shipped in India during the June 2015
quarter, 24.8 per cent were made locally - a significant rise as compared to 19.9 per
cent in the previous quarter - as per Cyber Media Research firm.
 Global telecom equipment makers like Ericsson, Nokia Networks and Huawei are
looking forward to over US$ 1 billion revenue opportunity as mobile phone operators
in India roll out high-speed broadband services on the 4G LTE technology across the
country.
 Lenovo Group of China has commenced manufacturing its smart phones in India,
through its contract manufacturer Flex’s facility near Chennai, thus becoming the
largest Chinese company to follow ‘Make in India’ strategy.
 Foxconn, the world’s largest contract-manufacturing firm for consumer electronics
and manufacturer for Apple products, has signed a Memorandum of Understanding
(MoU) with Maharashtra state government to invest US$ 5 billion over the next three
years for setting up a manufacturing unit between Mumbai and Pune.
Government Initiatives
The government has fast-tracked reforms in the telecom sector and continues to be
proactive in providing room for growth for telecom companies. Some of the other
major initiatives taken by the government are as follows:
 The Telecom Regulatory Authority of India (TRAI) has directed the telecom
companies or mobile operators to compensate the consumers in the event of dropped
calls with a view to reduce the increasing number of dropped calls.
 With a view to encourage consolidation in the telecom sector, the Government of
India has approved the rules for spectrum trading that will allow telecom companies
to buy and sell rights to unused spectrum among themselves. The Union Cabinet
chaired by the Prime Minister, Mr. Narendra Modi, gave its approval to the guidelines
on spectrum sharing, aimed to improve spectral efficiency and quality of service,
based on the recommendations of the Telecom Regulatory Authority of India (TRAI).
 The Central Government’s several initiatives to promote manufacturing in the
country, such as ‘Make in India’ campaign appears to have had a positive impact on
mobile handsets manufacturing in the country. Companies like Samsung, Mircomax
56
 and Spice had been assembling handsets in the country already. Xiaomi and Motorola,
along with Lenovo have also started assembly of smart phones in India. Firms like
HTC, Asus and Gionee too have shown interest in setting up a manufacturing base in
the country.
 The Government of India plans to roll out free high-speed Wi-Fi in 2,500 cities and
towns across the country over the next three years. The program entails an investment
of up to Rs 7,000 crore (US$ 1.06 billion) and will be implemented by state-owned
Bharat Sanchar Nigam Ltd (BSNL)

LIST OF TELECOM COMPANIES IN INDIA

“Connecting India”

Bharat Sanchar Nigam Limited (abbreviated BSNL) is an Indian state-

owned telecommunications company headquartered in New Delhi. It was incorporated
on 15 September 2000 and took over the business of providing of telecom services
and network management from the erstwhile Central Government Departments of
Telecom Services (DTS) and Telecom Operations (DTO), with effect from 1 October
2000 on a going concern basis. It is the largest provider of fixed
telephony and broadband services with more than 60% market share and sixth
largest mobile telephony provider in India. However, in recent years the company's
revenues and market share have plummeted into heavy losses due to intense
competition in the Indian telecommunications sector. BSNL is India's oldest
communication service provider and had a customer base of 93.29 million as of June
2015. It has footprints throughout India except for Mumbai and New Delhi, which are
managed by Mahan agar Telephone Nigam (MTNL).

57
 "Do the new", "Keep it simple, silly"

Tata DOCOMO is an Indian cellular service provider on the GSM, CDMA and
platform-arising out of the strategic joint venture between Tata Teleservices and NTT
Docomo in November 2008. DOCOMO stands for Do Communications Over Mobile
Network. It is the country's seventh largest operator in terms of subscribers (including
both GSM and CDMA).Fast growing network. On 2015 spectrum auction Tata
docomo won 10 MHz frequency bandwidth in Tamil Nadu circle. Tata Docomo is at
present shutting down the CDMA business. It has started calling its subscribers, in
Mumbai to migrate to GSM and confirmed CDMA network would not be available
after 1st July 2016.

Reliance Communications Ltd. (RCOM) is an Indian Internet

access and telecommunications company headquartered in Navy Mumbai, India. It
provides CDMA (CDMA2000, 1xRTT, EV-DO), GSM (Voice, 2G, 3G) mobile
services, fixed line broadband and voice services, DTH depending upon the areas of
operation. Reliance Communications is the fourth largest telecom operator in India
with 109.90 million subscribers as of June 2015.Established in 2002, it is
a subsidiary of Reliance Anil Dhirubhai Ambani Group. Reliance Communication IT
Support is provided by Reliance Tech Services and Telecom network is maintained

58
and operated byEricsson, transmission towers are maintained by its subsidiary
Reliance Infratel. Reliance Infocomm laid the largest Optic Fiber Cable network in
the country in 2003 to 2005, approximately 135,000 km, and touched almost all top
broadband cities with the help of their Franchisee's - Local Cable Operators (LCO's).
On an average 1900 large LCO's were connected to the Reliance Infocomm network
to provide Voice, Data and Video services known as Triple Play on IPTV platform.
After the split of the Telecom business venture between Mukesh Ambani and Anil
Ambani the telecom business was handed over to Anil Ambani, who later christened
the company as "Reliance Communications Limited”. In November 2015, Reliance
Communications entered into an agreement to acquire MTS India.

“Don’t express yourself”

Bharti Airtel Limited is an Indian global telecommunications services company

headquartered in New Delhi, India. It operates in 20 countries across South
Asia, Africa, and the Channel Islands. Airtel provides GSM, 3G and 4G LTE mobile
services, fixed line broadband and voice services depending upon the country of
operation. It is the largest mobile network operator in India and the third with
325 million subscribers. Airtel was named India's second most valuable brand in the
first ever Brands ranking by Mill ward Brown and WPP plc.

Airtel is credited with pioneering the business strategy of outsourcing all of its
business operations except marketing, sales and finance and building the 'minutes

59
factory' model of low cost and high volumes. The strategy has since been adopted by
several operators. Airtel's equipment is provided and maintained
by Ericsson and Nokia Solutions and Networks whereas IT support is provided
by IBM. The transmission towers are maintained by subsidiaries and joint venture
companies of Bharti including Bharti Infratel and Indus Towers in India. Ericsson
agreed for the first time to be paid by the minute for installation and maintenance of
their equipment rather than being paid up front, which allowed Airtel to provide low
call rates of ₹1/minute (US$0.02/minute).

Mahan agar Telephone Nigam Limited (MTNL)

महानगर टे लीफोन ननगम नलनमटे ड (एमटीएनएल)

“MTNL hai to sahi hai”

Mahan agar Telephone Nigam Limited (MTNL) is a state-

owned telecommunications service provider in the metro cities of Mumbai and New
Delhi in India and in the island nation of Mauritius in Africa. The company had
a monopoly in Mumbai and New Delhi until 1992, when the telecom sector was
opened to other service providers. "Transparency makes us different" is the motto of
the company. The Government of India currently holds 100% stake in the
company.[3] In recent years, MTNL has been losing revenue and market share heavily
due immense competition in the Indian telecom sector

60
 “An idea can change your life”

Idea Cellular (commonly referred to as simply Idea, and stylized as !dea) is an

Indian mobile network operator based in Mumbai, Maharashtra. Idea is a pan-India
integrated GSM operator offering 2G,3G and 4G mobile services. Idea is
India’s third largest mobile operator by subscriber base. Idea has 182 million
subscribers as of 31 December 2015

“Ab Mera Number Hai”

Telenor India (formerly known as Uninor[4][5]), is an Indian mobile network

operator based in Gurgaon, Haryana, India. The company is a wholly owned
subsidiary of Telenor Group, a telecommunications company headquartered in Oslo,
Norway. Telenor owns 100% of the stake in the holding company, Telenor India
Communications Pvt Ltd.

Telexing offers mobile voice and data services based on

the GSM technology, on 5 MHz spectrum. Telenor services are commercially
available in 6 circles, covering a population footprint of 600 million people. Telenor
serves more than 30 million customers in the states of Uttar Pradesh, Uttarakhand,

61
Bihar, Jharkhand, Maharashtra, Goa, Gujarat, Andhra Pradesh and Telangana. The
mobile service provider targets youth and other communities within the Indian mass
market. In recent Spectrum auctions, Telenor secured fresh spectrum in 4 of its
existing circles and in a new circle of Assam. Spectrum acquired by Uninor in the
1800Mhz band[6] UP (East) – 1.8 MHz UP (West) & Uttarakhand – 2.0 MHz Bihar &
Jharkhand – 2.2 MHz Andhra Pradesh & Telangana – 1.4 MHz Assam – 6.0 MHz

“Power to you”

Vodafone India Ltd. is the second largest mobile network operator in India by
subscriber base, after Airtel with a market share of 18.42%. It is headquartered
in Mumbai, Maharashtra. It has approximately 185 million customers as of June 2015.
It offers both prepaid and postpaid GSM cellular phone coverage throughout India with
better presence in the metros. Vodafone India provides services on basis of 900 MHz
and 1800 MHz digital GSM technology. Vodafone India launched 3G services in the
country in the January–March quarter of 2011 and plans to spend up to $500 million
within two years on its 3G networks. It has already launched its 4G services in
Mumbai from February 2016 and plans to expand its network to various cities from
March 2016.

62
 COMPANY PROFILE

Bharat Sanchar Nigam Ltd. was incorporated on 15th September

2000 . It took over the business of providing of telecom services and network
management from the erstwhile Central Government Departments of Telecom
Services (DTS) and Telecom Operations (DTO), with effect from 1st October‘ 2000
on going concern basis. It is one of the largest & leading public sector units providing
comprehensive range of telecom services in India.

BSNL has installed Quality Telecom Network in the country & now focusing on
improving it, expanding the network, introducing new telecom services with ICT
applications in villages & winning customer's confidence. Today, it has about 43.74
million line basic telephone capacity, 8.83 million WLL capacity, 72.60 million GSM
capacity, 37,885 fixed exchanges, 68,162 GSM BTSs, 12,071 CDMA Towers, 197
Satellite Stations, 6,86,644 RKm. of OFC, 50,430 RKm. of microwave network
connecting 623 districts, 7330 cities/towns & 5.8 lakhs villages .

BSNL is the only service provider, making focused efforts & planned initiatives to
bridge the rural-urban digital divide in ICT sector. In fact there is no telecom operator
in the country to beat its reach with its wide network giving services in every nook &
corner of the country & operates across India except New Delhi & Mumbai. Whether
it is inaccessible areas of Sache41ms glacier or North-Eastern regions of the country,
BSNL serves its customers with a wide bouquet of telecom services namely Wire line,
CDMA mobile, GSM mobile, Internet, Broadband, Carrier service, MPLS-VPN,
VSAT, VoIP, IN Services, FTTH, etc. BSNL is numerous Uno of India in all services
in its license area. The company offers wide ranging & most transparent tariff
schemes designed to suit every customer. BSNL has 90.09 million cellular & 5.06

63
million WLL customers as on 31.07.2011. 3G Facility has been given to all 2G
connections of BSNL. In basic services, BSNL is miles ahead of its rivals, with 24.58
million wire line phone subscribers i.e. 71.93% share of the wire line subscriber
base. BSNL has set up a world class multi-gigabit, multi-protocol convergent IP
infrastructure that provides convergent services like voice, data & video through the
same Backbone & Broadband Access Network. At present there are 8.09 million
broadband customers.

The company has vast experience in planning, installation, network integration

& maintenance of switching & transmission networks & also has a world class ISO
9000 certified Telecom Training Institute. During the 2010-11, turnover of BSNL is
around Rs. 29,700 Cores.

History
The foundation of Telecom Network in India was laid by the British sometime in 19th
century. The history of BSNL is linked with the beginning of Telecom in India. In
19th century and for almost entire 20th century, the Telecom in India was operated as
a Government of India wing. Earlier it was part of erstwhile Post & Telegraph
Department (P&T). In 1975 the Department of Telecom (Dot) was separated from
P&T.

Dot was responsible for running of Telecom services in entire country until 1985
when Mahan agar Telephone Nigam Limited (MTNL) was carved out of Dot to run
the telecom services of Delhi and Mumbai. It is a well known fact that BSNL was
carved out of Department of Telecom to provide level playing field to private
telecoms.

Subsequently in 1990s the telecom sector was opened up by the Government for
Private investment, therefore it became necessary to separate the Government's policy
wing from Operations wing. The Government of India corporatized the operations
wing of Dot on October 01, 2000 and named it as Bharat Sanchar Nigam Limited
(BSNL).BSNL operates as a public sector.

64
VISION:

 Be the leading telecom service provider in India with global presence.

 Create a customer focused organization with excellence in customer care, sales
and marketing.
 Leverage technology to provide affordable and innovative telecom.
Services/products across customer segments.
MISSION:

Be the leading telecom service provider in India with global presence.

 Generating value for all stakeholders - employees, shareholders, vendors &
business associates
 Maximizing return on existing assets with sustained focus on profitability
 Becoming the most trusted, preferred and admired telecom brand
 To explore International markets for Global presence

Creating a customer focused organization with excellence in customer care,

sales& marketing .
 Developing a marketing and sales culture that is responsive to customer needs mer
care, sales& marketing
 Excellence in customer service-”friendly, reliable, time bound, convenient and
courteous service”

Leveraging technology to provide affordable and innovative products/ services

across customer segments
 Offering differentiated products/services tailored to different service segments
 Providing reliable telecom services that are value for money
Providing a conducive work environment with strong focus on performance
 Attracting talent and keeping them motivated
 Enhancing employees skills and utilizing them effectively
 Encouraging and rewarding individual and team/group performance
Establishing efficient business processes enabled by IT
 Changing policies and processes to enable transparent, quick and efficient
decision making
 Building effective IT systems and tools

65
OBJECTIVES:

 To be the Leading Telecom Services provider by achieving higher rate of growth

so as to become a profitable enterprise.
 To provide quality and reliable fixed telecom service to our customer and thereby
increase customers confidence.
 To provide customer friendly mobile telephone service of high quality and play a
leading role as GSM operator in its area of operation.

Strategy for:
 Rightsizing the manpower
 Providing greater customer satisfaction>/li>

Contribute towards:
 Broadband customers base of 20 Man in India by the end of 2011-12 as per
broadband policy 2004.
 Providing telephone connections in villages as per Government policy.

To leverage the existing infrastructure of BSNL for facilitating implementation of

other government programmers and initiatives particularly in the rural areas.

Board of Directors

The Board comprise of 12 Directors, of which 5 [including the CMD] are whole time
Directors and 2 Government Nominee Directors . The present composition is as
under
 Chairman & Managing Director- Shri Anupam Shrivastava
 Director - Consumer Fixed Access(CFA)- Shri N.K.Gupta
 Director - (Enterprise) - Shri N.K.Mehta
 Director - (CM) - Shri R.K.Mittal
 Director - (HRD) & (Fin)- Smt. Sujata Ray
 Govt. Director- Shri N.SIVASAILAM
 Govt. Director- Smt. Padma Iyer Kaul

66
PROCEDURES FOLLOWED IN THE DECISION-MAKING PROCESS,
INCLUDING CHANNELS OF SUPERVISION AND ACCOUNTABILITY

The decisions making process of the Company follows the following Channels:

BOARD OF DIRECTORS

\CHAIRMAN AND MANAGING DIRECTOR

FUNCTIONAL DIRECTORS

EXECUTIVES

STAFF:
Distribution of Group-wise staff strength of BSNL (numbers) as on 31st March 2011
is indicated below:

67
Aspiration AS

 Be the leading Telecom Service Provider in India with global presence.

 Create a customer focused organization with excellence in sales, marketing
and customer care.
 Leverage technology to provide affordable and innovative products/services
across customer segments
 Provide a conducive work environment with strong focus on performance
 Establish efficient business processes enabled by IT
Awards:

1. BSNL Announces the Prestigious “Bharat Sanchar Seva Padak Awards”- 2010
2. BSNL received Dalai Street Investment Journal (DSIJ)'The Best PSU Awards
2015' under the category of 'Highest Turnover PSU in Mini Ratna - Non
Manufacturing'
3. TEMA (Telecom Equipment Manufacturers Association of India) Telecom
Company of the year-Providing Encouragement to Indigenous Telecom
Manufacturers. Recognition to the contribution to Promote Encouragement to
Indigenous Telecom Manufacturing in the country, BSNL has been awarded
Excellence in providing encouragement.
4. Corporate responsibility award for BSNL

BSNL SERVICES

BSNL Mobile is major provider of GSM cellular mobile services under the
brand name Cellone. BSNL provides complete telecom services solution to enterprise
customers including MPLS, P2P and Internet leased lines. It provides fixed line
services and landline using CDMA technology and its extensive optical fiber network.
BSNL provides Internet access services through dial-up connection as prepaid, Net
One as Postpaid and Data One as BSNL Broadband.

BSNL offers value-added services, such as Free Phone Service (FPH), India
Telephone Card (Prepaid card), Account Card Calling (ACC), Virtual Private
Network (VPN), Tele-voting, Premium Rate Service (PRM), Universal Access
Number (UAN). BSNL also offers the IPTV which enables customers to watch
television through internet and Voice and Video Over Internet Protocol (VoIP).In

68
2007, BSNL announced plans for providing 5 million broadband connectivity and
secured 80% of the INR 25 billion rural telephony project of Government of India. On
20 March 2009, BSNL launched black cherry services across India. BSNL paid Rs.
101.87 billion for 3G spectrum in 2010.As of 2011, BSNL offers coverage in over
800 cities across India .BSNL launched in 2012 a 3G wireless pocket router named
Wink net Mf50.

BSNL 3G provides HSPA+ service with highest speed of 21.1 Mbit/s

downlink and 5.76 Ambit/s uplink. BSNL announced the discontinuation of its
telegram services from 15 July 2013, after 160 years in service. It was opened to the
public in February 1855; it was upgraded to a web-based messaging system in 2010,
through 182 telegraph offices across India.

Contribute towards: National Plan Target of 500 million subscriber base for the
country by December 2010.Broadband customer‘s base of 20 million in the country by 2010
as per Broadband Policy 2004.Providing telephone connection in villages as per government
policy. Implementation of Triple play as a regular commercial proposition. Bharat Sanchar
Nigam Ltd. formed in October, 2000, is World's 7th largest Telecommunications Company
providing comprehensive range of telecom services in India Wire line, CDMA mobile, GSM
Mobile, Internet, Broadband, Carrier service, MPLS-VPN, VSAT, VoIP services, IN Services
etc. Presently it is one of the largest and leading & leading public sector units in India. BSNL
has installed Quality Telecom Network in the country and now focusing on improving it,
expanding the network, introducing new telecom services with ICT applications in villages
and wining customer's confidence. Today, it has about 46 million line basic telephone
capacity, 8 million WLL capacity, 52 Million GSM Capacity, more than 38302 fixed
exchanges, 46565 BTS, 3895 Node B ( 3G BTS), 287 Satellite Stations, 614755 Rkm of OFC
Cable, 50430 Rkm of Microwave Network connecting 602 Districts, 7330 cities/towns and
5.6 Lakhs villages. BSNL is the only service provider, making focused efforts and planned
initiatives to bridge the Rural-Urban Digital Divide ICT sector. In fact there is no telecom
operator in the country to beat its reach with its wide network giving services in every nook &
corner of country and operates across India except Delhi & Mumbai. Whether it is
inaccessible areas of Sachem glacier and North-eastern region of the country.

BSNL serves its customers with its wide bouquet of telecom services. BSNL is
numerous operator of India in all services in its license area. The company offers vide ranging
& most transparent tariff schemes designee to suite every customer. BSNL cellular service,
Cell One, has 55,140,282 2G cellular customers and 88,493 3G customers as on 30.11.2009.

69
In basic services, BSNL is miles ahead of its rivals, with 35.1 million Basic Phone subscribers
i.e. 85 per cent share of the subscriber base and 92 percent share in revenue terms. BSNL has
more than 2.5 million WLL subscribers and 2.5 million Internet .Customers who access
Internet through various modes viz. Dial-up, Leased Line, DIAS, Account Less Internet(CLI).
BSNL has been adjudged as the NUMBER ONE ISP in the country. BSNL has set up a world
class multi-gigabit, multi-protocol convergent IP infrastructure that provides convergent
services like voice, data and video through the same Backbone and Broadband Access
Network. At present there are 0.6 million Data One broadband customers. The company has
vast experience in Planning, Installation, network integration and Maintenance of Switching
& Transmission Networks and also has a world class ISO 9000 certified Telecom Training
Institute. Scaling new heights of success, the present turnover of BSNL is more than Rs.351,
820 million (US $ 8 billion) with net profit to the tune of Rs.99, 390 million (US $ 2.26
billion) for last financial year. The infrastructure asset on telephone alone is worth about
Rs.630, 000 million (US $ 14.37 billion).

GROWTH AND DEVELOPMENT

BSNL (then known as Department of Telecom) had been a near monopoly during the socialist
period of the Indian economy. During this period, BSNL was the only telecom service
provider in the country (MTNL was present only in Mumbai and New Delhi). During this
period BSNL operated as a typical state-run organization, inefficient, slow, bureaucratic, and
heavily unionized. As a result subscribers had to wait for as long as five years to get a
telephone connection. The corporation tasted competition for the first time after the
liberalization of Indian economy in 1991. Faced with stiff competition from the private
telecom service providers, BSNL has subsequently tried to increase 117 efficiencies itself.
Dot veterans, however, put the onus for the sorry state of affairs on the Government policies,
where in all state-owned service providers were required to function as mediums for
achieving egalitarian growth across all segments of the society. The corporation (then Dot),
however, failed miserably to achieve this and India languished among the most poorly
connected countries in the world. BSNL was born in 2000 after the corporatization of Dot.
The efficiency of the company has since improved. However, the performance level is
nowhere near the private players. The corporation remains heavily unionized and is
comparatively slow in decision making and implementation. Though it offers services at
lowest tariffs, the private players continue to notch up better numbers in all areas, years after
year. BSNL has been providing connections in both urban and rural areas. Reactivated Mobile
connections are available at many places across India. BSNL has also unveiled cost-effective
broadband internet access plans (Data One) targeted at homes and small businesses. At

70
present BSNL enjoys around 60% of market share of ISP services. 2007 has been declared as
"Year of Broadband" in India and BSNL is in the process of providing 5 million Broadband
connectivity by the end of 2007. BSNL has upgraded existing Data one (Broadband)
connections for a speed of up to 2 Mbit/s without any extra cost. This 2 Mbit/s broadband
service is being provided by BSNL at a cost of just US$ 11.7 per month (as of 21/07/2008 and
at a limit of 2.5GB monthly limit with 0200-0800 hrs as no charge period). Further, BSNL is
rolling out new broadband services such as triple play. BSNL is planning to increase its
customer base to 108 million customers by 2010. With the frantic activity in the
communication sector in India, the target appears achievable. BSNL is a pioneer of rural
telephony in India. BSNL has recently bagged 80% of US$ 580 m (INR 2,500 cores)
Rural Telephony project of Government of India.[ On the 20th of March, 2009, BSNL
advertised the launch of BlackBerry services across its Telecom circles in India. The
corporation has also launched 3G services. Bharat Sanchar Nigam Limited, the largest
Public Sector Undertaking of the Nation, is certainly on a financial ground that's
sound. The Company has a net worth of Rs. 88,634 cores (US$ 17.40 billion),
authorized equity capital of Rs. 10,000 cores (US $ 1.96 billion), Paid up Equity
Share Capital of Rs. 5,000 cores (US $ 0.98 billion) and Revenues is Rs. 35,812 cores
(US $ 7.03 billion) in 2008-09. (Note: 1 US $ = 50.9500 INR as on 31-03-2009).

ADMINISTRATIVE UNITS
BSNL is divided into a number of administrative units termed as telecom
circles, metro districts, project circles and specialized units. It has 24 telecom circles,
2 metro districts, 6 project circles, 4 maintenance regions, 5 telecom factories, 3
training institutions and 4 specialized telecom units.

AREA OF OPERATION

The world class services offered by the BSNL: The Plain old,
Countrywide telephone Service through 32,000 electronic exchanges. Digitalized
Public Switched Telephone Network (PSTN) with a host of Phone Plus value
additions. BSNL launched Data One broadband service in January 2005 which shall
be extended to 198 cities very shortly. The service is being provided on existing
copper infrastructure on ADSL2 technology. The minimum speed offered to the
customer is 256 Kbps at Rs. 250/- per month only. Subsequently, other services such
as VPN, Multicasting, Video Conferencing, Video-on-Demand, Broadcast application
etc will be added. Keeping the global network of Networks networked, the

71
countrywide Internet Services of BSNL under the brand name BSNL BROADBAND
includes Internet dial up/ Leased line access, 119 CLI based access (no account is
required) and DIAS service, for web browsing and E-mail applications. You can use
your dialup sancharnet account from any place in India using the same access no
‗172233‘, the facility which no other ISP has. BSNL has customer base of more than
1.7 million for sancharnet service. BSNL also offers Web hosting and co-location
services at very cheap rates. ISDN Integrated Service Digital Network Service of
BSNL utilizes a unique digital network providing high speed and high quality voice,
data and image transfer over the same line. It can also facilitate both desktop video
and high quality video conferencing. Intelligent Network ; Intelligent Network
Service offers value-added services, such as:

Free phone service [FPH] India Telephone card [Prepaid Card] Account
Card Calling [ACC] Virtual Private Network [VPN] Tele-Voting Premium Rae
Service [PRM] Universal Access Number [UAN] and more. I net; India s x.25 based
packet Switched Public Data Network is operational in 104 cities of the country. It
offers x.25 x.28 leased, x.28 Dial up (PSTN) Connection) and frame relay services.
Leased Line; BSNL provides leased lines for voice and data communication for
various applications on point to point basis. It offers a choice of high, medium and
low speed leased data circuits as well as dial-up lines. Bandwidth is available on
demand in most cities. Managed Leased Line 120 Network (MLLN) offers flexibility
of providing circuits with speeds of nx64 kbps up to 2mbps, useful for Internet leased
lines and International Principle Leased Circuits (IPLCs). Cellular Mobile Service;
BSNL‘s GSM cellular mobile service Cellone has a customer base of over 5.2
million. Cell One provides all the services like MMS, GPRS, Voice Mail, E-mail,
Short Message Service (SMS) both national and international, unified messaging
service (send and receive e-mails) etc. You can use Cell One in over 160 countries
worldwide and in 270 cellular networks and over 1000 cities/towns across India. It
has got coverage in all National and State Highways and train routes. Cell One offers
all India Roaming facility to both pre-paid and post-paid customers (including
Mumbai & Delhi). WLL ; This is a communication system that connects customers to
the Public Switched Telephone Network (PSTN) using radio frequency signals as a
substitute for conventional wires for all or part of the connection between the
subscribers and the telephone exchange. Countrywide WLL is being offered in areas

72
that are non-feasible for the normal network. Helping relieve congestion of
connections in the normal cable/wire based network in urban areas. Connecting the
remote and scattered rural areas. Limited mobility without any air-time charge.

BUSINESS DEVELOPMENT

Apart from BSNL Managed Enterprise Solutions, EB-I unit takes care of Total
Solutions for Large Enterprise Customers. BSNL Managed Enterprise Solutions are in
following areas

Existing Services:

1. Managed Network Service (MNS)

2. Global Managed Network Service (GMNS)
3. Managed Software as a solution (SaaS)
4. Managed Global conferencing.
5. Managed Telepresence (Under Finalization)
6. Managed Digital Signage (Under Finalization)
7. Managed Unified Communication Services (Under Finalization)

Future Services:

1. Managed security solution

2. Managed web-based solution.

OBLIGATIONS of BSNL

1. Towards customers and dealers: To provide prompt, courteous and efficient

service and quality of products / services at fair and reasonable services.
2. Towards employees: Develop their capability and advancement through
appropriate training and career planning. Expeditious redressal of
grievances. Fair dealings with recognized representatives of employees in
pursuance of healthy trade union practices and sound personnel policies.
3. Towards the Society –Corporate Social Responsibilities

73
 CORPORATE SOCIAL RESPONSIBILITIES OF BSNL

BSNL carryout the CSR work in accordance with a written policy namely,
‘BSNL CSR Policy’ as well as ‘Government of India’s Guidelines on CSR for CPSEs
(March 2010)’, issued by Department of Public Enterprises. CSR activities in BSNL
shall be guided, controlled and maintained by a Board Known as ‘BSNL CSR Board’,
at BSNL Circle (State) level. Executive committees are also functioning under the
aforesaid Boards, for executing the CSR work at their respective territories.
Ordinarily, BSNL undertakes the CSR activities on the following areas:

1. Natural disasters and calamities.

2. Provision of ambulances.
3. Provision of Broadband connections.
4. Provision of GSM Mobile PCOs.
5. Provision of WLL data connections.

BSNL donates computer to a Government school

The Bharat Sanchar Nigam Limited (BSNL) - donated a computer with free
unlimited broadband usage for the students of the Government Special School for
Physically Challenged at Villapuram in the city. The computer was presented to the
school under the corporate social responsibility activities of the BSNL for which
Madurai had been allotted Rs. 1 lakh for this year, its General Manager V.K. Sanjeevi
. Apart from a personal computer, the BSNL has provided table, chair, modem and a
telephone with incoming facility. One more educational institution would get a similar
facility.

Employee’s Welfare Activities Commitment towards the principles of

corporate social responsibilities is inbuilt within the corporate philosophy of BSNL. A
very wide range of welfare programmes, with a focus on the employees’ welfare is
continuously implemented by the Staff Welfare Board of the Company.

74
 DATA ANALYSIS & INTERPRETATION

1. Do you have awareness about the compensation payment system?

TABLE-4.1

OPINION RESPONDENTS PERCENTAGE

Yes 71 59.16

No 49 40.84

Total 120 100

CHART-4.1

PERCENTAGE
70

60

50

40

30 59.16
40.84
20

10

0
Yes No

INTERPRETATION:

Some of the respondents were aware of compensation payment system.

59.16% of the respondents opinioned yes and 40.84% of the respondents opinioned
no.

75
2. What is opinion on compensation in your organization?
TABLE-4.2

OPINION RESPONDENTS PERCENTAGE

Excellent 26 21.66

Good 74 61.66

Poor 20 16.67

Total 120 100

CHART-4.2

PERCENTAGE

70
60
50
40
30
20 61.66
21.66 16.67
10
0
Excellent Good Poor

INTERPRETATION:

Majority of the respondents feels good in compensation of the organization.

21.66% of the respondents feel excellent, 61.66% of respondents opined good and
16.68% of the respondents opined poor in compensation of the organization.

76
3. Are you satisfied with the compensation package that you are receiving?
TABLE-4.3

OPINION RESPONDENTS PERCENTAGE

Yes 82 68.33

No 38 31.67

Total 120 100

CHART-4.3

PERCENTAGE

68.33
31.67

Yes No

INTERPRETATION:

Majority of the respondents expressed that satisfied with the compensation

package. 68.33% of the respondents expressed yes, 31.67% of the respondents
opinioned no.

77
4. Is there any procedure of receiving formal feedback by employees on Company
policies, compensation, benefits, and employee attitudes?
TABLE-4.4

OPINION RESPONDENTS PERCENTAGE

Yes 79 65.83

No 41 34.17

Total 120 100

CHART-4.4

PERCENTAGE

80

60

40
65.83 34.17
20

0
Yes No

INTERPRETATION:

Majority of the respondents said that there is procedure of receiving formal

feedback by employees on Company policies, compensation, benefits, and employee
attitudes. 65.83% of the respondents expressed yes, 34.17% of the respondents
opinioned no.

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5. Are you satisfied with your payroll along with your working condition?
TABLE-4.5

OPINION RESPONDENTS PERCENTAGE

Yes 89 74.16

No 31 25.84

Total 120 100

CHART-4.5

PERCENTAGE

25.84

Yes
74.16
No

INTERPRETATION:

Majority of the respondents were satisfied with the payroll along with
working condition. 74.16% of the respondents expressed yes, 25.84% of the
respondents opinioned no.

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6. Do you think compensation package in the organization should be altered?
TABLE-4.6

OPINION RESPONDENTS PERCENTAGE

Yes 30 25

No 90 75

Total 120 100

CHART-4.6

PERCENTAGE

80
70
60
50
40
75
30
20 25
10
0
Yes No

INTERPRETATION:

The above graph and table reveals that 25 % of the respondents expressed that
compensation package in the organization should be altered 75 % of the respondents
expressed that compensation package in the organization should not be altered.

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7. What is your opinion about your working conditions or environment?
TABLE-4.7

OPINION RESPONDENTS PERCENTAGE

Highly satisfied 30 25

Satisfactory 72 60

Not satisfactory 18 15

Total 120 100

CHART-4.7

PERCENTAGE

60

50

40

30
60
20
25
10 15

0
Highly satisfied Satisfactory Not satisfactory

INTERPRETATION:

Majority of the respondents feels comfortable in the working conditions.25% of

the respondents were highly satisfied 60% of the respondents were satisfactory and
15% of the respondents were not satisfactory.

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 8. Do you feel that a compensation amenity helps in personal growth?
TABLE-4.8

OPINION RESPONDENTS PERCENTAGE

To large extent 26 21.66

To some extent 74 61.67

Very little extent 20 16.66

Total 120 100

CHART-4.8

PERCENTAGE

70
60
50
40 61.67
30
20
21.66
10 16.66
0
To large extent To some extent Very little extent

INTERPRETATION:

The response shows that most of the employees feel that a compensation
amenity helps in personal growth to some extent.21.66% of the respondents opined to
large extent, 61.67% of the respondents expressed to some extent and 16.66% of the
respondents opined to very little extent.

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 9. To what extent the compensation package motives your job performance?
TABLE-4.9

OPINION RESPONDENTS PERCENTAGE

To large extent 64 53.33

To some extent 40 33.33

Very little extent 16 13.34

Total 120 100

CHART-4.9

PERCENTAGE

60

50

40

30 53.33
33.33
20

10 13.34

0
To large extent To some extent Very little extent

INTERPRETATION:

It is observed that 53.33 % of the respondents are deliberate that compensation

package motives job performance to large extent. 33.33% respondents of the
employees intended to some extent and 13.34% of the respondents opined to very
little extent

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10. What is your opinion about medical facilities available in your organization?
TABLE-4.10

OPINION RESPONDENTS PERCENTAGE

Excellent 35 29.16

Good 60 50

Satisfactory 25 20.84

Total 120 100

CHART-4.10

PERCENTAGE

50

40

30

20
50
20.84
10 29.16

0
Excellent Good Satisfactory

INTERPRETATION:

The above graph and table reveals that 29.16 % of the respondents expressed
that medical facilities available organization was excellent, 50% of the respondents
opined good and 20.84% expressed satisfactory.

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 11. To what extent, security conditions are providing by the organization?
TABLE-4.11

OPINION RESPONDENTS PERCENTAGE

To large extent 36 30

To some extent 64 53.33

Very little extent 20 16.67

Total 120 100

CHART-4.11

PERCENTAGE

60

50

40

30

20
53.33
30
10 16.67

0
To large extent To some extent Very little extent

INTERPRETATION:

It is observed that 30 % of the respondents are deliberate that security

conditions are providing by the organization to large extent, 53.33 % of the
respondents are extract to some extent and 16.67% of the respondents opined to very
little extent.

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 12. To what extent, the compensation programs are useful ?
TABLE-4.12

OPINION RESPONDENTS PERCENTAGE

To large extent 78 65

To some extent 32 26.66

Very little extent 10 8.34

Total 120 100

CHART-4.12

PERCENTAGE

70
60
50
40
65
30
20 26.66
10 8.34
0
To large extent To some extent Very little extent

INTERPRETATION:

The above graph and table reveals that 65% of the respondents expressed
that compensation programs are useful to large extent, 26.66 % of the respondents
opined to some extent and 8.34% of the respondents expressed very little extent.

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13. What is the criterion for providing compensation amenities?
TABLE-4.13

OPINION RESPONDENTS PERCENTAGE

Company overall development 50 41.66

Company improvement 40 33.34

Further career growth 30 25

Total 120 100

CHART-4.13

PERCENTAGE

100%

80%

60%

40% 33.34
41.66 25
20%

0%
Company overall Company Further career
development improvement growth

INTERPRETATION:

It is observed that 41.66 % of the respondents states that the criterion for
providing compensation amenities is depends upon the company overall
development,33.34 % of the respondents opined that compensation amenities is
depends upon the company improvement & 25 % of the respondents opined that
compensation amenities is depends upon the further career growth.

87
14. Do you have promotional policies in organization?
TABLE-4.14

OPINION RESPONDENTS PERCENTAGE

Yes 71 59.16

No 49 40.84

CHART-4.14

PERCENTAGE

No 40.84

Yes 59.16

0 10 20 30 40 50 60

INTERPRETATION:

Majority of the respondents deliberates that there is a promotional policies in

organization 59.16% of the respondents expressed yes, 40.84% of the respondents
opinioned no.

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15. Is the management giving any special benefits for the women employees?
TABLE-4.15

OPINION RESPONDENTS PERCENTAGE

Yes 70 58.33

No 50 41.67

CHART-4.15

PERCENTAGE

No 41.67

58.33
Yes

0 10 20 30 40 50 60

INTERPRETATION:

Majority of the respondents deliberates that there is special benefits for the
women employees 58.33% of the respondents expressed yes, 41.67% of the
respondents opinioned no

89
 FINDINGS

 It is identified that the some of the employees are not aware of compensation
payment system.

 It is observed that some of the employees expressed that unsatisfied with the
compensation package.

 It is noticed that 15% of the respondents felts that there is no comfortable in

the working conditions.

 It is observed that 53.33 % of the respondents are deliberate that compensation

package motives job performance to large extent. 33.33% respondents of the
employees intended to some extent and 13.34% of the respondents opined to
very little extent.

 It is observed that 30 % of the respondents are deliberate that security

conditions are providing by the organization to large extent.53.33 % of the
respondents are extract to some extent and 16.67% of the respondents opined
to very little extent.

 It is noticed that majority of the respondents deliberates that there is no

promotional policies in organization

 It is observed that the women employees deliberates that there is special

benefits for them

90
 SUGGESTIONS

 It is suggested to the company to create aware of compensation payment

system.

 It is recommended to the company to provide better compensation package

which turns to better performance in their work.

 It is advised to the company to create better comfortable working condition to

their employees which lead to reduce their stress.

 It is suggested to the company the compensation package should motives job

performance which helps the company to achieve their organizational goals
and as well as personal goals of their employees.

 It is recommended to the company the security conditions providing by the

organization should be done to large extent.

 It is advised to the company there should be a promotional policy in

organization which leads to job satisfaction of their employees.

 It is recommended to the company should continue the benefits to the women

employees for long period of time.
.

91
 CONCLUSION

Each and every company must identify its mission, understand the perspective within
which it has been operating and developing a policy and structure for meeting its’
objectives and goals. To retain, attract and motivate the employees required for high
levels of performance the human capital plan it adopts must contribute to its success.

The direct compensation program and strategy utilization must be fitting the context
and contributing to organizational effectiveness. The rate of the pay must be fair,
perceived and competitive as appropriate by all companies. If the management of the
any company believes pay rate above the market averages for some or all employment
produce benefits it must paying above market averages for some or all occupations
produce benefits it must influence those benefits resulting against the costs. There are
a number of options open if the company believes paying for performance fits the
organization’s context and provides more advantages than the disadvantages. The
resources which are available in the organization for example; management skills,
money, freedom from regulatory/citizen intervention etc should be a main concern,
and one that should be measured early in negotiations. The effect on workforce is also
a critical concern.

Before cutting down the benefits and to add direct compensation the company should
be determining the direct compensation strategy and the programs that are best for
them. What is vital is that the system of the pay used is appropriate and effective,
provided the company’s mission, environment objectives, culture, strategy and
structure.

However the direct compensation system is not always the best. We can find its bad
influence in some of the organizations.

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 BIBLIOGRAPHY
TEXT BOOKS:

 Dipak kumar Bhattacharya, Compensation Management, OXFORD

 Dr.kanchan Bhatia, Compensation Management, Himalaya Publishing house
 N.K.Singh Human Resource Management, Excel Publications.
 Jyothi - Human Resource Management, Pearson Education, New Delhi.
 P.S Rao , Essentials of Human Resource Management & IR,
Himaliya,Mumbai
 Dwivedi &Agarwal, Human Resource Management, Vikas, ND

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